Vanguard

[UnclePhilip]

With this year's ISA money now in our Charles Stanley ISA accounts, I'm thinking of putting the money in funds rather than individual shares

Our shares are mainly UK large cap higher yielding, while we also have funds with the Fisher global fund

A couple of questions: (i) is there any advantage in investing directly with Vanguard rather than through your broker? and (ii) any advice on the plethora of different Vanguard funds? I'm looking presently at a 100% equity global sort of thing

Thanks

Uncle

[RececaDron]

I'm looking presently at a 100% equity global sort of thing

What's the time horizon for this money being invested?

[UnclePhilip]

What's the time horizon for this money being invested?

Oh, long term (depends on how long before I peg it....)

Uncle

[nmdhqbc]

I think it's just down to whether vanguards 0.22% (off the top of my head) works out cheaper than your current providers charging structure. Or another broker if you choose. Normally depends on amount invested and how often you buy or sell. I think the underlying fund you choose to buy will have the same level of charges.

[TedSwippet]

A couple of questions: (i) is there any advantage in investing directly with Vanguard rather than through your broker? ...

Charles Stanley apparently charges 0.25% annually on top of any fund charge for holding funds on its platform. If you go to Vanguard you would pay 0.15% plus the fund's charge. The cheapest is probably currently iWeb. A £25 one-off account opening fee, then £5 to buy/sell but zero annual holding charge.

On the full £20k ISA allowance that's £50/year at Charles Stanley, £30/year at Vanguard, or £30 for the first year (assuming you don't already hold an account there) and zero thereafter at iWeb.

[tjh290633]

I am very distrustful of the current obsession with Vanguard, purely on the basis of their apparently very low charges.

I know that I am not typical, but my ISA management fees in 2017-18 were 0.007% while my trading costs were 0.059%, eight times higher.

Vanguard do not disclose their trading costs, as I understand it, but they have to be considerable.

TJH

[mc2fool]

Our shares are mainly UK large cap higher yielding, ... any advice on the plethora of different Vanguard funds? I'm looking presently at a 100% equity global sort of thing

As you've already got a bunch of UK exposure then you may consider their FTSE Developed World ex-U.K. Equity Index Fund, plus one of the emerging markets fund to get the rest of the world.

[paulnumbers]

I am very distrustful of the current obsession with Vanguard, purely on the basis of their apparently very low charges.

I know that I am not typical, but my ISA management fees in 2017-18 were 0.007% while my trading costs were 0.059%, eight times higher.

Vanguard do not disclose their trading costs, as I understand it, but they have to be considerable.

TJH

They have, but it seems that anyone who works in the industry believes the methodology for calculating the transaction costs is terrible.

https://www.vanguardinvestor.co.uk/cont ... s-2018.pdf

I've been convinced the best method is to compare long term performance rather than look at the fee's. Eg with the below link you can compare VEVE against Fidelity Index World P, and over a 3 year period you can see the lower costs of fidelity do appear to translate into a slightly better return. The problem with something like Vanguard Lifestrategy is that there is nothing to compare it to.

http://tools.morningstar.co.uk/uk/fundc ... geId=en-GB

[JohnB]

Watch out that brokers charge different custodial rates for Vanguard funds and ETFs. The latter are usually cheaper, sometimes free.

[Lootman]

I am very distrustful of the current obsession with Vanguard, purely on the basis of their apparently very low charges.

I know that I am not typical, but my ISA management fees in 2017-18 were 0.007% while my trading costs were 0.059%, eight times higher.

Vanguard do not disclose their trading costs, as I understand it, but they have to be considerable.

TJH

I've been convinced the best method is to compare long term performance rather than look at the fee's.

Agreed. At least for index funds all you need to do is look at the tracking error, since that reflects all costs and fees. If the tracking error is minimal then the fund has to be highly efficient.

With active funds the costs and fees are more material, and it isn't so easy to determine them. But even so the performance figures do not lie, and if the returns exceed the benchmark after fees and costs, then that's a good sign that either the costs are low or that they are worth it.

I'm not sure I'd agree with TJH that there is an "obsession" with Vanguard. But their funds have become very popular for good reasons: price, performance and reputation. Others like the fact that the management company is owned by the funds themselves, and that Vanguard has a good ethical record.

You don't get to be the second biggest fund manager on the planet without doing something right.

[monabri]

With this year's ISA money now in our Charles Stanley ISA accounts, I'm thinking of putting the money in funds rather than individual shares

Our shares are mainly UK large cap higher yielding, while we also have funds with the Fisher global fund

A couple of questions: (i) is there any advantage in investing directly with Vanguard rather than through your broker? and (ii) any advice on the plethora of different Vanguard funds? I'm looking presently at a 100% equity global sort of thing

Thanks

Uncle

I found this short video (13 minutes) to be a good explanation of the Vanguard funds.

https://youtu.be/mWhi157ljLw

Also

https://pensioncraft.com/review-of-vang ... egy-funds/

Here's the link to another short video on VG funds by the same people

https://youtu.be/p-O3d6mel28

[Muddywaters]

(i) yes, if you invest with a broker rather than vanguard you’ve got the flexibility of changing your mind and switching some of all of that money to another provider/fund/IT without transferring, which can take time. Generally speaking investing directly will be cheaper. You need to weigh up whether that additional flexibility is worth the higher charge. I’ve made this call recently and decided I rather have the flexibility despite not intending on switching out

(iI) can’t go far wrong with vanguard all world etf. Does what it says. Only downside for me is the current weighting towards the US. I tend to reduce this by holding separate Japanese and Europe ex uk Etf’s But that’s a personal weighting call.


To weigh in on the costs issue, it’s also important to consider replication. Some would rather pay additional costs for full replication of holdings, rather than optimised or synthetic (I won’t hold synthetic full stop). This costs the provider more in admin and transaction costs. But then optimised etf’s could have a bigger tracking error because they don’t hold all the stocks. Just some other factors to consider.....

[nmdhqbc]

Generally speaking investing directly will be cheaper.

I don't get the "Generally Speaking". You can choose the best value. You don't have to stick with something more expensive. Going directly with Vanguard is opening another account anyway so why not just open a new broker account which is cost effective.

With any amounts over say £10k and investing a couple of times a year iWeb is cheaper. The higher that amount gets (and it should rise after all that's the whole point) the bigger the iWeb advantage is. Even the lowest of % charges ends up expensive when your portfolio grows.

[StOmer]

...(i) is there any advantage in investing directly with Vanguard rather than through your broker? and (ii) any advice on the plethora of different Vanguard funds? I'm looking presently at a 100% equity global sort of thing

(I) I think that one advantage would be to split funds across platforms if you wish to worry about the protection that may offer.
(ii) I would go for either a target retirement date fund or the Vanguard Life Strategy 100% fund, I would hold these on the Vanguard platform.