Vanguard lowers charges on UK funds

Vanguard have lowered the ongoing charges on all the funds that our clients are invested (effective 1st September 2014). The Annual Management Charges (AMC) have been reduced by between 25% to 50%. Ranging from from 0.08% to 0.27% per annum, the charges compare very favourably to the typical retail investment fund of 1.5% p.a.! (as reported by Which: Are fund charges eating into your returns)

These cost reductions reflect Vanguard’s commitment to lowering the cost of investing. Vanguard’s unique mutual structure enables economies of scale to be passed back to it’s shareholders which are it’s investors.  A full description can be found at this link: Why ownership matters at Vanguard. Vanguard has a near 40-year history of reducing the fees investors pay for its funds.

Costs Matter

While you cannot control what happens in the markets, you can control how much you pay to invest. High costs will erode investment returns over the long term and therefore it follows, the less you pay, the more you keep in your pocket.

Morningstar, who make a living out of rating fund manager’s and their funds released a study of the impact of mutual fund expenses on fund performance.  This showed that low-cost funds outperform high-cost funds, including Morningstar’s own picks, over every time period. A related finding is that the amount you pay in fees to a fund manager is a better predictor of future fund performance than a fund’s track record.  The full article can be found at the following link: Morningstar News

Bottom Line

The reduced charges of the Vanguard funds for which we typically recommend to our clients are as follows:

 

New Annual Management Charge

Previous Annual Management Charge

FTSE UK Equity Index

0.08%

0.15%

FTSE Developed World ex-UK Equity Index

0.15%

0.30%

Emerging Markets Stock Index

0.27%

0.40%

Global Short-Term Bond Index

0.15%

0.20%

UK Short-Term Investment Grader Bond Index

0.15%

0.20%

Global Bond Index

0.15%

0.20%

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