Charging just 0.15pc, is this Britain’s cheapest investment firm?


Low-cost “tracker” fund giant Vanguard, one of the biggest investment firms in America, is from today offering its services to British savers.

On offer initially are Isas, Junior Isas and a non-Isa dealing account.

The accounts come with an annual charge of 0.15pc, capped at £375, with no fee on amounts invested above £250,000

For smaller portfolios, this will make Vanguard the cheapest platform currently available.

There may be cheaper options for those with large portfolios, as there are providers with lower capped fees. For instance, Interactive Investor charges £20 per quarter.

A Vanguard self-invested pension (Sipp) will not be available at launch, but will be added “in due course”, the mutual said. A lifetime Isa is not available.

Investors will be able to open an account with a minimum £500 lump sum, or a £100 monthly contribution.

The full range of Vanguard’s funds will be available, including its popular LifeStrategy all-in-one portfolios, and a wide range of index-tracking exchange traded funds.

Dealing in listed exchange traded funds at the market quoted price will cost £7.50. Otherwise, there will be a 10am and 2pm dealing point each trading day – investors happy to accept the price at those points will not be charged to buy or sell an ETF.

The launch comes amid increased pressure on the traditional, “active” fund management industry to provide better value to retail investors.

Vanguard has been at the forefront of championing low cost passive investing, and is now the world’s second biggest asset manager after attracting more money in 2016 than its 10 nearest competitors.

The new platform will offer a low-cost route to a well diversified portfolio. Its offer is likely to excite renewed debate about the merits of “active” versus “passive” investing.

Who and what is Vanguard?

Vanguard is a global asset manager founded by famous investor John Bogle in 1974. It now manages more than $4 trillion in assets, making it second only to asset management giant Blackrock in terms of size.

Unlike many of the other largest asset managers, Vanguard predominantly offers passive “tracker” funds.

Mr Bogle is responsible for the creation of the first tracker fund available to individual investors, which launched in 1976. His book Common Sense on Mutual Funds is highly regarded within the investment community.

Tracker funds have been growing in popularity, and Vanguard launching its own platform will likely fuel that.

As a mutual Vanguard has another advantage, in that profits are returned to its customers via lower fees, which has seen it repeatedly reduce the charges on some of its funds in recent years.