Vanguard UK Fund Fee Cuts

In a move that will benefit thousands of investors across the UK, the investment company Vanguard has just announced a fee cut for 36 of its funds.

Vanguard pioneered the index fund in the US in the 1970s. And now, the UK arm of the business has grown to a level which gives the company the ability to cut it’s fees once again.

Contents

• ETF Fee Reductions
• Index Fund Fee Reductions
• Active Fund Fee Reductions
• Average Fee Reductions
• Conclusion

The fee cut will see ongoing management charges reduced across 36 Vanguard funds. 13 ETFs, 22 index funds and Vanguard’s Sterling Short-Term Money Market Fund.

Vanguard ETF Fee Reductions

• FTSE All-World UCITS ETF - Cut from 0.25% OCF to 0.22% OCF

• FTSE Developed Asia Pacific ex Japan UCITS ETF - Cut from 0.25% OCF to 0.15% OCF

• FTSE Developed Europe ex UK UCITS ETF - Cut from 0.12% OCF to 0.1% OCF

• FTSE Developed Europe UCITS ETF - Cut from 0.12% OCF to 0.1% OCF

• FTSE Developed World UCITS ETF - Cut from 0.18% OCF to 0.12% OCF

• FTSE Emerging Markets UCITS ETF - Cut from 0.25% OCF to 0.22% OCF

• FTSE Japan UCITS ETF - Cut from 0.19% OCF to 0.15% OCF

• EUR Corporate Bond UCITS ETF - Cut from 0.12% OCF to 0.09% OCF

• EUR Eurozone Government Bond UCITS ETF - Cut from 0.12% OCF to 0.07% OCF

• U.K. Gilt UCITS ETF - Cut from 0.12% OCF to 0.07% OCF

• USD Corporate 1-3 Year Bond UCITS ETF - Cut from 0.15% OCF to 0.09% OCF

• USD Corporate Bond UCITS ETF - Cut from 0.12% OCF to 0.09% OCF

• USD Treasury Bond UCITS ETF - Cut from 0.12% OCF to 0.07% OCF

Vanguard Index Fund Fee Reductions

• Emerging Markets Stock Index Fund - Cut from 0.27% OCF to 0.23% OCF

• Global Small-Cap Index Fund - Cut from 0.38% OCF to 0.29% OCF

• Japan Stock Index Fund - Cut from 0.23% OCF to 0.16% OCF

• Pacific ex-Japan Stock Index Fund - Cut from 0.23% OCF to 0.16% OCF

• SRI European Stock Fund - Cut from 0.3% OCF to 0.16% OCF

• SRI Global Stock Fund - Cut from 0.35% OCF to 0.22% OCF

• Euro Government Bond Index Fund - Cut from 0.25% OCF to 0.12% OCF

• Euro Investment Grade Bond Index Fund - Cut from 0.3% OCF to 0.12% OCF

• Global Corporate Bond Index Fund - Cut from 0.25% OCF to 0.18% OCF

• Global Short-Term Corporate Bond Index Fund - Cut from 0.25% OCF to 0.18% OCF

• Japan Government Bond Index Fund - Cut from 0.25% OCF to 0.12% OCF

• U.K. Government Bond Index Fund - Cut from 0.15% OCF to 0.12% OCF

• U.K. Investment Grade Bond Index Fund - Cut from 0.15% OCF to 0.12% OCF

• U.K. Short-Term Investment Grade Bond Index Fund - Cut from 0.15% OCF to 012% OCF

• U.S. Government Bond Index Fund - Cut from 0.25% OCF to 0.12% OCF

• U.S. Investment Grade Credit Index Fund - Cut from 0.3% OCF to 0.12% OCF

• FTSE Developed World ex-U.K. Equity Index Fund - Cut from 0.15% OCF to 0.14% OCF

• FTSE Global All Cap Index Fund - Cut from 0.24% OCF to 0.23% OCF

• FTSE U.K. All Share Index Unit Trust - Cut from 0.08% OCF to 0.06% OCF

• FTSE U.K. Equity Income Index Fund - Cut from 0.22% OCF to 0.14% OCF

• U.K. Inflation-Linked Gilt Index Fund - Cut from 0.15% OCF to 0.12% OCF

• U.K. Long Duration Gilt Index Fund - Cut from 0.15% OCF to 0.12% OCF

Vanguard Active Fund Fee Reductions

• Sterling Short-Term Money Market Fund - Cut from 0.15% OCF to 0.12% OCF

Average Vanguard Fee Cuts

If you compare the ongoing fund charges (OCFs) to what they were before, here’s how the fee reductions stack up.

Of the 13 ETFs that saw a fee reduction, the average OCF falls from 0.16% to 0.11%. Of the 22 index funds that were granted a fee reduction, the average cost drops from 0.22% to 0.15%. The one active fund that was cut saw a reduction from 0.15% to 0.12%.

And this isn’t the first fee cut. In the past 10 years Vanguard OCFs fell from an average of 0.34% to 0.2% today.

Conclusion

Most investors are aware of the benefits of long term investing and compounding returns. But some forget the other force pulling their returns back in the opposite direction. Because fees compound too.

This decision will benefit thousands of individual investors across the UK. It’s economies of scale in action and displays how Vanguard’s growth in the UK benefits Vanguard investors.