Vanguard hits seven-month £500m AUM target

Vanguard has reached £500m in assets under management since launching in the UK just seven months ago.

The US giant set up 11 index-tracking funds in June 2009 and has seen huge demand from institutional and retail investors through platforms.

The biggest attractions for retail investors have been the £36m Vanguard FTSE UK Equity Index fund, the £12m Vanguard FTSE UK Equity Income Index fund - both managed by Christine Franquin - and the £16m Vanguard FTSE Developed World ex UK Equity index fund, managed by Gerard O'Reilly.

Head of retail Peter Robertson says the company is pleased with the milestone but is aware it has a long way to go.

"There are a lot of people who knew who Vanguard were and wondered why it was not yet in the UK," Robertson says.

"All of these things take some time, but nevertheless there was some demand for Vanguard before Vanguard opened.

"We have got half a billion in around six months. If you look at our platform flows month to month they are on an upward trend. We are not making any forecasts for 2010 but we are very pleased with the start in 2009 and hope it continues.

"We are still having lots of discussions with people and we have got an awful lot of work to do. However, we do not have things like property or inflation-linked products and they may be areas we need to look at."

Robertson says he had seen platform investors move away from bonds in recent months, with three quarters moving in to equity mandates.

He says. "We do not believe in market timing but some people move money on that basis so it is fair to say that more recently bond funds have been less popular.

"Of retail investments, around 85% has been in equities. Most of that has gone to UK equity, then UK equity income and the developed world ex UK."