Vanguard  

Vanguard cuts fees on 36 funds

Vanguard cuts fees on 36 funds

Vanguard has cut rates on 36 of its products as fundhouses continue to battle for market share.

The asset manager announced today (October 23) it has reduced fees across its exchange traded fund and mutual fund ranges by as much as nine basis points.

The rates of 13 ETFs have been reduced alongside 22 index funds and the Vanguard Sterling Short-Term Money Market fund.

Fundhouses have been battling for market share over recent years by cutting fees in a perceived ‘race to the bottom’.

In June, M&G’s new fund pricing was criticised for not going far enough and failing to make the products more competitive for many investors.

Earlier this month Vanguard rival BMO Asset Management continued its push into the territory traditionally occupied by passive providers with the launch of three 'low cost' active funds.

Asset managers are also in a “battle for margin” against advisers and platforms amid a regulatory push for fee transparency.

Fees and profit margins charged by firms such as Vanguard have faced intense regulatory scrutiny in recent years as the Financial Conduct Authority has pushed asset managers to reveal explicitly how much they charge investors, for what services, disclose previously hidden costs and justify those against often lacklustre performance.

Following the rate cut, Vanguard’s full line-up in the UK — including ETFs, index funds and its actively managed fund range — now has an average charge of 0.20 per cent.

Vanguard’s index mutual fund line-up in the UK now charges an average of 0.15 per cent, and the ETF index line-up has an average fee of 0.10 per cent.

Vanguard has a history of disrupting the fees asset managers are able to charge by introducing passive funds, which generally charge less than those funds that are actively managed, to the retail market.

Sean Hagerty, head of Vanguard for Europe, said: “For too long, investors have been poorly served with high-cost, complex investments. 

“Since 1975, Vanguard has led the way in giving investors a fair deal through good-value, straight-forward and high-quality investments. However, more work needs to be done to ensure investors understand the impact of costs on investment returns.”

Mr Hagerty added there was still a misconception that you paid more for an investment the better it performed but said in reality, it just impacted the returns investors made.

imogen.tew@ft.com

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