What is Vanguard?
Vanguard is a US investment firm that’s been around for 40 years, famed for its low-cost index tracker funds.
It has launched a new UK investment platform charging an annual platform fee of just 0.15% or 15p for every £100 you invest, which is significantly cheaper than rivals like Hargreaves Lansdown (0.45%) and Fidelity (0.35%).
The move means UK investors can now access Vanguard’s low-cost tracker funds directly from the company rather than through an advisor or third-party fund supermarket.
What does Vanguard offer?
Vanguard is offering three products to UK investors, which include:
- Vanguard Stocks & Share ISA;
- Vanguard Junior ISA;
- Vanguard General investment account.
The firm also plans to launch a self-invested personal pension (SIPP) in the future.
The new service will give UK investors access to 65 of Vanguard’s funds, including equity funds (which invest in shares), fixed income funds (which invest in corporate bonds and gilts), and ‘blended’ funds which invest in both.
You can start investing with a minimum lump sum of £500 and/or a monthly savings contribution of £100.
What fees does Vanguard charge?
Vanguard is charging an annual platform fee of just 0.15%, capped at £375 a year, meaning investments over £250,000 are effectively fee-free.
It’s ongoing charges range from 0.06% on the Vanguard FTSE 100 Index Unit Trust to 0.8% a year for the Vanguard Global Emerging Markets Fund, and you won’t have to worry about transfer fees or dealing charges for funds.
So, to invest £10,000 into the Vanguard FTSE UK All Share Index Unit Trust you would pay an ongoing charge of 0.08% plus an annual platform fee of 0.15% bringing the cost to £23 a year.
This is much cheaper than investing in the same Vanguard product on other platforms, which on average would set you back £49.58 a year.
How does Vanguard compare?
Vanguard is potentially the cheapest investment platform on the market, depending on how much you're looking to invest.
Consumer site Which? looked at the annual cost of investing £10,000 and £200,000 across 17 fund supermarkets, factoring in two trades a year.
You can see how it fared in full below.
At a £10,000 price point, Vanguard is the cheapest of the 16 other fund supermarkets in the survey, with an annual platform fee of £15.
However, the research shows Vanguard can be beaten on larger investments. Someone with £200,000 invested would pay a platform fee of £300 a year with Vanguard, but Halifax Share Dealing (£38), Interactive Investor (£80), The Share Centre (£190) and Alliance Trust Savings (£240) are cheaper.
You should note that the models in the research also include two trades where applicable, and Vanguard doesn’t charge for trading funds. There’s also no annual platform fee for investments greater than £250,000.