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Vanguard cuts charges on 25 funds as tracker price war hots up

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28/08/2014
Vanguard is to cut charges on 25 funds, including its LifeStrategy range, as it responds to recent price cuts from other providers in the tracker space.

The changes, which will come into effect next Monday (1 September), will see Vanguard charge just 0.08% for its UK equity index trackers.

Earlier this month Investment Week revealed providers were on the verge of responding to Fidelity’s recent price cuts, and today’s move puts Vanguard broadly in line with those charges: Fidelity’s UK index tracker costs 0.07% on its own platform and 0.09% from other providers.

Vanguard’s global ex-UK tracker (at 0.15%) is now cheaper than Fidelity’s World tracker (0.18% via Fidelity or 0.2% on other platforms), but Fidelity remains cheaper for Japan (0.1% or 0.12% compared with 0.23% at Vanguard) and EM (0.23% or 0.25% compared with 0.27% at Vanguard) trackers.

Other providers, such as BlackRock and L&G, fall in between the two on EM, Asian and Japan trackers.

Ongoing charges across Vanguard’s index funds will now range from 0.08% to 0.38%. ETF ongoing charges will range from 0.07% to 0.29%, while ongoing charges for the LifeStrategy fund range will be lowered to 0.24%.

Vanguard Europe managing director Tom Rampulla said: “As we broaden our presence in Europe, we will leverage operating efficiencies and use our increasing global scale to keep costs to a minimum for investors.

“These fee reductions are business as usual for Vanguard.”

Fidelity responded by saying it remained the lowest cost provider of trackers for regional equity markets.

Ben Waterhouse, head of UK retail sales at Fidelity Worldwide Investment, said: “We launched our low cost index range in March and further cut our charges in May to offer investors an alternative to some of the poor value trackers available today. This was a popular move as since launch, our range of seven trackers has grown by over £400m.

“Today, we remain the lowest cost provider of index trackers for regional equity markets. Investors and intermediaries can access Fidelity Index funds from as low as 0.07% OCF making them the best value equity tracker funds available in the market.”

Mutual fund range Former ongoing charge  New ongoing charge 
FTSE UK Equity Index  0.15%  0.08%
FTSE UK Equity Income Index  0.25%  0.22%
FTSE UK All Share Index Unit Trust  0.15%  0.08%
FTSE Developed World ex-UK Equity Index   0.3%  0.15%
FTSE Developed Europe ex-UK Equity Index   0.25%  0.12% 
US Equity    0.2%  0.1%
SRI Global Stock  0.4%   0.35% 
Global Small-Cap Index   0.4%  0.38%
SRI European Stock   0.35%  0.3%
Emerging Markets Stock Index  0.4%  0.27%
Japan Stock Index   0.3%  0.23%
Pacific Ex-Japan Stock Index   0.3%  0.23%
Bond funds  0.2%  0.15%
     
     
ETF range                                                 Former ongoing charge  New ongoing charge 
 S&P 500 UCITS ETF  0.09%  0.07%
 FTSE 100 UCITS ETF  0.1%  0.09%
 FTSE Developed Europe UCITS ETF  0.15%  0.12% 
 FTSE Emerging Markets UCITS ETF  0.29%  0.25%

 

 

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