Last Updated on 13 December 2024 by Dan Wilderness
Hello everyone! Today we’re reviewing the American Investment giant Vanguard, who have also become a leading provider of investments in the UK.
I’ve been using the Vanguard platform for myself for a while to invest in index funds and whilst it’s met my needs well, I’m going to run through what’s available on the platform, where it’s particularly likely to advantage you and when you’d be better off looking at rival providers.
As ever – our normal note that we take care with what we write on this site but it is not official “financial advice” and whatever investments and savings you enter need to be right for your circumstances. We always suggest doing your own further research. If you’re in doubt about anything, it’s worth consulting a regulated and reputable financial advisor who can provide tailored advice built for you.
Unbiased is a resource that can help you match with an advisor who matches your needs.
Who are Vanguard?
Vanguard was started in 1975 and has been something of a harbinger of the ETF revolution – products that enable you to make many small investments in lots of companies via a fund very cheaply.
This philosophy still runs through the Vanguard approach – that if you’re paying high charges for your investments this eats into your returns, so any charges should be as low and efficient as possible – the marketing represents this as “Vanguard Value.”
The company was founded by John Bogle, and amongst personal finance devotees like myself you’ll find a subset of “Bogleheads” who go with a simple investment approach that staying well diversified in low cost funds is a path to success.
We’ve covered the principle of why investment fees and charges matter in more detail here at the Wilderness already. If you’re interested in learning more about the investment philosophies of John Bogle, we would recommend Bogle’s “Little Book of Common Sense Investing” found here.
Vanguard launched it’s first UK office in 2009, and has been rapidly expanding since.
What Accounts do Vanguard offer?
Whilst the specific investments are built around investment funds (more below) there are a few options for the account types you can pick (and you can have more than one).
If you have one of these accounts elsewhere, you can also elect to transfer your account from elsewhere.
Vanguard ISA
A tax-efficient investment account which limits your exposure to capital gains and dividend taxes up to a limited amount. If you haven’t made use of your ISA allowance for the year already, starting your investments in here make sense.
If you’re uncertain about ISA’s and why they’re a strong option, we’ve written a guide to them here!
Vanguard General Account
As the ISA but without the tax efficiency – if you’re already used up your ISA limit for the year then this is your choice.
Vanguard Junior ISA
If you’re looking to invest for your little one’s future, a junior ISA is an account managed by you, but the money is locked away until your child turns 18.
Vanguard Personal Pension (SIPP)
If you are managing your own personal pension, you can set up an account to do this with Vanguard funds to plan for retirement.
You can find more specifics for each of the accounts, alongside key investor information at the Vanguard website here.
What investments do Vanguard sell?
Vanguard Funds Overview
Investing with Vanguard enables you to invest in a range of equity or bond/fixed income investment funds with 119 different fund options being on offer at the time of writing.
One point of note is that these are all Vanguard’s own funds. That keeps costs low, but if you’d like to invest in funds not in the Vanguard range as well you won’t be able to do via the Vanguard platform.
(We discuss some of the differences between equity and bond funds here if you’re not familiar with them).
The range of choices available allows you to adapt your investments to a range of risk profiles. A number of the funds are also focused towards particular locations as well, meaning you can choose to place an emphasis on particular countries or regions if you think those may outperform others.
What Vanguard doesn’t have is funds which target any particular sector of the market – so for instance if you think travel stocks may outperform, you can’t easily gear yourself towards that.
Instead, all Vanguard funds are diversified across a range of industries. This helps manage risk, but some investors may want the freedom of a fuller range of funds and to make those allocation decisions.
An example of Vanguard’s funds selection screen can be seen below. You can see more information about each fund by selecting the Key Investor Information bucket.
I’ll then call out some specific ranges of Vanguard products:
Vanguard LifeStrategy Funds
If you’re looking for an easy option for those new to investing or looking for a “sort and forget” approach, the Vanguard LifeStrategy funds are a good place to start.
These are a range of 5 funds that provide maximum diversification across a range of risk points between Bonds and Equities, in 20% increments.
The funds are cheap and have had strong historical returns profiles – they’re a very easy option that will suit many investors.
Vanguard SustainableLife Funds
The Sustainablelife funds are similar to the LifeStrategy funds above in terms of having a broad diversification approach, but also apply an ESG filter to the stocks within them to ensure investments are targets towards sustainable activity.
Vanguard Target Retirement Funds
These funds allow you to select a broad target date for the year you’re planning to retire, and apply a principle known as “lifestyling” to adjust what you’re invested in as you get closer to retirement.
The idea behind this is that Bonds are historically less volatile than equities as investments. So further away from retirement, your investment profile will accept more volatility in order to build up returns by weighting you towards equities, and then try and stabilise this towards a less volatile retirement fund as you approach retirement.
(NB: This approach isn’t necessarily right for everyone – some want to continue to be invested in retirement!)
What fees and charges apply to investing with Vanguard?
Two ongoing fees are charged by Vanguard, both of which are very reasonable compared to competitors.
However, Vanguard has introduced a new additional minimum fee for smaller accounts which also needs taken into consideration as well.
Platform fee
This is a fee charged for your usage of the platform, and is 0.15% of your total investment. If you’re investing over £250,000, the fee is capped at £375 annually.
Fund Fee
You’ll also be charged a fee specific to any fund you then invest in with Vanguard, which varies for each investment. The cheapest start from 0.06%, and the average fund cost is 0.20%
So let’s take an example we invest £100,000 in Vanguard in a fund with the average cost. This would leave us with annual costs and charges of 0.35% of your investment, or £350 per year.
(Note: All information is correct at time of writing)
Minimum Account Fee
Vanguard have now also added a minimum account fee of £4 a month for accounts with a total amount of under £32,000 in total.
To be clear this is a round up rather than an additional fee – I.E if you’d pay £3.20 a month in the above fund and platform fees, this fee will add on 80p to make it the £4 minimum.
We’re not fans of this change as it actually makes Vanguard a fairly expensive platform if looking to invest very small amounts.
Someone investing £25kish won’t feel much difference, but someone just starting out with a couple of thousand mean the fees are expensive relative to the size of investment.
Does Vanguard charge dealing fees?
Vanguard has an option where you do not pay any dealing fees, however for mutual funds your transaction will take a couple of days to go through as Vanguard will time your transaction to when it’s easiest to transact and as such as cheap as possible.
You can also choose an option to invest near instantly at a next available price when investing in an ETF, at a price of £7.50 a charge.
Our Review of Vanguard UK
We’ve had a generally strong experiences with Vanguard in the UK and have summed up our experiences in each area below.
Range of Funds
Vanguard scores slightly lower in this area because of the fact that you’re limited to choose only Vanguard’s range of funds, whereas rivals such as Hargreaves and Fidelity have a much wider range of choice.
However, there’s still a very wide range of funds for most investors to choose various risk profile or target particular countries. We’ve also had consistent particularly good performance from the investments to date.
Interface and Ease of Use
Vanguard’s website is pretty intuitive and easy to use and navigate, and it’s easy to see the performance of your investments to date broken down by individual investments or month.
Vanguard have also recently introduced an App which is a very welcome step forward for them. The app doesn’t have the entire functionality of the website, but is well designed and will let you do any standard activity of investing, withdrawing or checking your balance.
Costs and Fees
Vanguard’s philosophy of low cost investing really comes through in their fee structure. Even the expensive options in the Vanguard range are still cheap relative to market, and some of the lowest cost ETF’s are amongst the cheapest funds in the market.
Whilst it is possible to beat Vanguard’s fees with some research (ironically even if you invest into Vanguard funds via other platforms) they make it very hard to pay a fee which is unreasonable and doesn’t represent fantastic value.
Update: We had this as 5 star, but we knocked off a star following Vanguard’s introduction of a minimum account fee for investors under £32k.
This actually makes Vanguard quite an expensive option for very small investors starting off with a couple of thousand, and as everyone has to get started somewhere and people will naturally want to test the waters, we see this as an unfortunate move.
Customer Service
I haven’t had to use Vanguard’s customer service too much, however when raising queries with regard to making a transfer or questions on their account they were speedy to respond via the web correspondence service and helpful.
They also had a wide range of FAQ’s, which I found were well written and have answered various questions for me in the past.
Overall Score
Vanguard’s best points really come through their philosophy – offering simple good funds at excellent prices that provide good investment returns, and when you put those three things together it’s pretty easy to make a recommendation.
For relatively beginner investors or those who just want a simple fire-and-forget solution it’s really hard to pick a better option than Vanguard.
The star off really comes for those more advanced investors who will want to target their funds and investment strategy towards specific outcomes, owing to the relatively limited lack of funds.
For a long time our biggest complaint about Vanguard was their lack of an app in the UK – but we’re so pleased they’ve finally address this as it was a bit inexcusable for a major brand!
How do I sign up for a Vanguard account?
You can sign up very easily at the Vanguard website – just select “Open an Account” or “Transfer to Vanguard” depending on if you have existing investments or not.
You’ll need your personal details, National Insurance Number and (if you’re looking to set up making payments by direct debit) a bank account to link.
Can I transfer my existing investments to Vanguard?
Yes, it’s very easy to do this, and you can do it either when signing up with Vanguard or transfer in at a later date.
Vanguard will take care of most of the initial aspects for you – you can raise an electronic transfer request if you have your account details, and Vanguard will be in touch if they need anything else.
What are the best funds with Vanguard?
Whilst we don’t recommend specific funds as ultimately you’ll need to ensure they’re right for your personal risk tolerances and circumstances, we’ve highlighted a couple of Vanguard’s most popular funds here.
We’ve also included their ticket symbols, as you can still invest in Vanguard funds even on other platforms.
All performance data sourced from Vanguard’s Key Investor Information pages.
Vanguard FTSE All-World UCITS ETF (VWRL)
If you’re simply looking for really strong diversification, this funds really broadens out the exposures to the wider markets. If you go for the distributing version of the fund it also pays a reasonable dividend to ensure you’re also receiving some ongoing income.
Ongoing charge: 0.22%.
Risk Rating: 6/7
Performance 2023: +22%
Performance 2022: -18.1%
Performance 2011: +18.4%
Vanguard S&P 500 UCITS ETF (GBP) (VUSA)
Recently, a lot of investment return has trended towards US markets. This fund allows you to invest in the US’s biggest companies at a very cheap price
Ongoing charge: 0.07%
Risk Rating: 6/7
Performance 2023: +25.9%
Performance 2022: -18.3%
Performance 2021: +28.4%
Vanguard USD Corporate 1-3 Year Bond UCITS ETF (VUSC)
For those looking for less risk and more certain if smaller in the form of bonds, this fund is low cost and offers some stability in the financing of large corporates.
Ongoing charge: 0.09%
Risk Rating: 3/7
Performance 2023: +5.6%
Performance 2022: -3.9%
Performance 2021: -0.2%
Any questions?
We’d absolutely love to hear from you if you have any questions about Vanguard, or would like to share your own experiences with them! Just leave us a note in the comments below.
And that’s it!
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