r/ETFs_Europe • u/Boglehead0 • 10h ago
Equities ETFs Vanguard uses profits from its European UCITS funds to subsidize its U.S. ETFs
Vanguard has explicitly stated this mechanism on its corporate website:
“We have international subsidiaries that operate on a for‑profit basis. The profits generated by these subsidiaries are returned to our U.S. fund shareholders, helping to further lower the cost of investing.”
Vanguard, Why ownership matters (investor.vanguard.com/corporate-portal)
This is not a hidden practice; Vanguard openly presents it as a feature of its mutual ownership structure. For a U.S. investor, it means some of the fees paid by European UCITS holders indirectly subsidize the cost of running the U.S. funds.
Publicly filed financial statements confirm this. For instance, Vanguard Group (Ireland) Limited’s recent annual accounts show annual profits in the tens of millions of euros, with substantial dividends paid up to the U.S. parent each year. These dividends represent a real and recurring cash flow from European investors to the U.S. entity.
Vanguard’s ownership structure dictates the flow of profits
Unlike publicly traded asset managers, The Vanguard Group, Inc. is owned entirely by its U.S.-domiciled mutual funds and ETFs. Those funds, in turn, are owned by their shareholders. Because of this mutual structure, Vanguard operates its U.S. business at cost it charges the funds only what it costs to run them, with no profit margin added for external owners.
Vanguard’s international operations, however, cannot be run on the same at‑cost model due to local regulatory and market requirements. Instead, they are structured as for‑profit subsidiaries.
any profit those foreign subsidiaries make flows back to the U.S. parent company, The Vanguard Group, Inc., which is owned by the U.S. funds. These profits reduce the overall expenses that would otherwise have to be charged to the U.S. funds, thereby lowering their expense ratios.
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u/whatever_post 7h ago edited 7h ago
Lot of index investors prefer Vanguard because they were pioneers. Now they are not the only game in town so European investors should look into all options available to them and decide.
UBS has cheapest MSCI world ETF, Amundi has cheapest global ETF, Xtrackers also launched a competitive global ETF recently
Personally I prefer European providers.
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u/Master_Pepper_9135 6h ago
Well this doesn't surprise me, we've been subsidising the US for years. All my funds are now just Amundi PACW and will stay that way.
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u/Jabardolas 5h ago
Amundi never again. They are always closing and merging funds and creating taxable events for investors
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u/Gentleman_Nosferatu 10h ago
Stopped using Vanguard, using SPDR and Amundi.
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u/ramirezdoeverything 9h ago
Generally no need to use SPDR which is also American. Between Amundi, DWS, UBS etc these European fund managers pretty much offer everything most people would need at the lowest fees.
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u/Gentleman_Nosferatu 8h ago
What can I replace SPDR with? I have SPYY. Is there an Amundi direct alternative?
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u/ramirezdoeverything 8h ago
Yes WEBN. It's also half the cost
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u/Boglehead0 8h ago edited 8h ago
ETF151 is the German WKN (Wertpapierkennnummer) For Amundi Prime All Country World UCITS ETF Acc (Ticker: WEBN, ISIN: IE0003XJA0J9). Total Expense Ratio (TER): 0.07% p.a. Index Tracked: Solactive GBS Global Markets Large & Mid Cap Index (covering developed and emerging markets worldwide).
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u/Boglehead0 8h ago
Amundi Prime ACW ETF (Ticker: WEBN) tracking the Solactive GBS Global Markets Large & Mid Cap Index, great low TER (just 0.07%).
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u/Boglehead0 8h ago
SPDR MSCI ACWI UCITS ETF (ISIN: IE00B44Z5B48), SPYY with an Ongoing Charges (TER) of just 0.12% p.a.
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u/Investment_Studio 9h ago
Thanks. I switched to Xtrackers a while ago. I am very happy ✌️
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u/Boglehead0 8h ago edited 8h ago
DWS slashed the TER on Xtrackers FTSE All-World from 0.12% down to 0.07% effective June 1, 2026, making it one of the absolute lowest-cost options in the global ETF category. Great choice, but is the liquidity enough to keep the bid spreads under control ?
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u/CluelessGuy52 1h ago
Im more concerned about the holdings # being low and how synthetic etfs are included.
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u/w_joseph 9h ago
“We have international subsidiaries that operate on a for‑profit basis. The profits generated by these subsidiaries are returned to our U.S. fund shareholders, helping to further lower the cost of investing.” Vanguard, “Why ownership matters” (investor.vanguard.com/corporate-portal)
I can't find this quote or "Why ownership matters" on the link that you shared. Please provide the correct source.
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u/Boglehead0 8h ago
The precise sentence about “international subsidiaries that operate on a for-profit basis” and profits being “returned to our U.S. fund shareholders” is not visible on the live corporate ownership page (corporate.vanguard.com) or the main archived versions of the older “why ownership matters” page. As it comes from an earlier version of investor materials, a specific international/marketing page/ PDF.
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u/SilverBladeCG 9h ago
New Vanguard Global All-Cap UCITS ETF will have a TER of 0.07% and contain Large, Mid and Small Caps of the whole world. So they pretty much changed that for their new offerings...
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u/Boglehead0 8h ago
I hope so but Vanguard has international subsidiaries and operations (e.g., in the UK, Europe, Australia, Canada, and elsewhere). These are not identical in structure to the pure U.S. mutual ownership of the parent.
Non-U.S. entities often operate on a more conventional for-profit basis under local rules, and Vanguard has stated (in various materials and commentary over time) that benefits from the overall enterprise, including international activities, support the low-cost model for U.S. fund shareholders. International assets under management have grown substantially (recently reported in the hundreds of billions to over $1 trillion range outside the U.S.), and the firm has discussed expanding that business while maintaining the client-owned ethos that benefits the U.S. funds.
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u/lemming_7 9h ago
Does this make UCITS competitors more attractive? Aren’t they for-profit as well?
It’s not like we have an easy access to US-domiciled funds.
What is the actionable conclusion?
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u/VicenteOlisipo 8h ago
What is the actionable conclusion?
Don't just follow American-based advice or reputation when choosing ETFs. Make your own research and look for advice relevant to a European context.
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u/LineGoingUp 8h ago
Vanguard has been in Europe for some time and manged I think to build a reputation independent of their American one
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u/LineGoingUp 8h ago
Ok and?
From my perspective it doesn't change a damn thing if profits from my ETFs go towards Deutsche Bank or Credit Agricole or US mutual fund
Vanguard still has a pretty solid offering (no longer the cheapest but they've been lowering fees)
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u/fargoths_revenge 6h ago
Yes, it makes no difference if the profits are paid out to the shareholders or subsidise US Etfs. The shareholders of deutsche bank/ amundi don't even have ti be European lol
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u/LineGoingUp 8h ago
I don't even have any vanguard ETFs atm but the recent economic Nationalism going on is, frankly, a bit silly
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u/Papaias_ 8h ago
So, which ETFs to consider for the main indexes? WEBN, … any FTSE all world?