For UK investors, the news that US firm Vanguard is launching an online investment service in Britain will prove welcome. Who are Vanguard, and what do they offer?
Who Are Vanguard?
According to the Financial Times, Vanguard is based in Pennsylvania, USA, and is considered the world’s biggest asset manager. In 2016 alone, it attracted in excess of $315bn worldwide from investors.
This US asset-management firm was established 43 years ago. It currently boasts seven million clients, with £3.3 trillion under management. Vanguard is now setting its sights on UK personal investors with the launch of a new direct offer.
Why Choose Vanguard?
Vanguard has made a name for itself as it offers tracker funds with exceptionally low charges. Its new UK online service will enable investors to set up an account with a lump sum of just £500, or a monthly investment of £100. Previously, Vanguard only dealt directly with personal investors with more than £100,000 to invest.
By charging an average annual fee of 0.14% of invested assets for fund management, it will charge 0.15% to investors for an annual administration fee.
These low-cost funds significantly undercut fees currently charged by rival asset-management firms in the UK, especially leading investment business Hargreaves Lansdown. In the wake of the news about Vanguard coming to the UK, shares in Hargreaves Lansdown tumbled by nearly 8%.
Vanguard will only be offering its own funds to investors, but the implication of its new offering is likely to shake up the entire UK investment sector, fuelling demand for financial advice. This could also see a growing need for back office systems for financial advisers, such as those offered by https://www.intelliflo.com/, to ensure investors get the information they require as efficiently and accurately as possible.
Although rival investment firms might not welcome Vanguard into the UK with open arms, many other people and organisations will. The Financial Conduct Authority (FCA), in particular, has made it clear for some time that investment firms are charging fees that are too high. An FCA report also suggested that investment firms should act in their clients’ best interests, especially with regards to showing how their products offer value for money.
The arrival of Vanguard in the UK will help to address the issues of high fees and value for money.