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Vanguard Lower Fund Fees

Vanguard is known for its low cost offering and Morningstar senior fund analyst Jose Garcia Zarate says this latest move shows that Vanguard is keeping true to its ethos

Emma Wall 28 August, 2014 | 3:40PM

Passive fund provider Vanguard has decreased annual charges on 25 tracker funds and exchange traded funds (ETFs). Effective from September 1, both equity and bond funds have had their charges lowered, in some cases halving the annual cost of investing.

The Silver Rated Vanguard FTSE UK Equity Index Fund and Vanguard FTSE UK All Share Index Unit Trust will cost just 0.08% a year, reduced from 0.15%, while the ongoing charge on the Vanguard Global Small-Cap Index Fund will be reduced from 0.4% to 0.38%. The Vanguard S&P 500 UCITS ETF (VUSD) has had costs cut to just 0.07% from 0.09%.

This is not the first time the fund provider has lowered investment costs.

Vanguard is known for its low cost offering and Morningstar senior fund analyst Jose Garcia Zarate says this latest move shows that Vanguard is keeping true to its ethos.

“Vanguard set out to provide no nonsense products at the lowest available cost and, reducing them at the first available opportunity,” he said. “This is what has made them so successful in the US and, quite clearly, want to replicate in Europe, particularly in the UK.”

Zarate went on to explain that as a company, Vanguard was not a serial launcher of funds, unlike some of its competitors, meaning they did not have thousands of offerings, or the costs associated with launching ‘flavour of the month’ products. 

“This allows them to focus on funds that anyone would like to have in their portfolio, and so generate economies of scale that get routinely passed on to investors,” said Zarate. “That’s their corporate strategy and is working well, allowing them to gain market share in the UK.  But it’s also good for investors. As we say in Morningstar, the only reliable predictor of future returns is cost, meaning the lower the cost, the greater the returns. So, this move is welcome and now we’ll have to see if other providers follow suit.”

The information contained within is for educational and informational purposes ONLY. It is not intended nor should it be considered an invitation or inducement to buy or sell a security or securities noted within nor should it be viewed as a communication intended to persuade or incite you to buy or sell security or securities noted within. Any commentary provided is the opinion of the author and should not be considered a personalised recommendation. The information contained within should not be a person's sole basis for making an investment decision. Please contact your financial professional before making an investment decision.

Securities Mentioned in Article

Security NamePriceChange (%)Morningstar
Vanguard FTSE U.K. All Shr Idx UT Acc209.46 GBP-0.52
Vanguard Glbl Small-Cap Idx Inv EUR Acc235.47 EUR-0.14
Vanguard S&P 500 UCITS ETF58.63 USD-0.16

About Author

Emma Wall  is former Senior International Editor for Morningstar

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