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  • FIRST POST
    • edinburgher
    • By edinburgher 16th May 17, 8:21 AM
    • 10,666Posts
    • 55,357Thanks
    edinburgher
    Vanguard direct to customer offering confirmed
    • #1
    • 16th May 17, 8:21 AM
    Vanguard direct to customer offering confirmed 16th May 17 at 8:21 AM
    Looks like Vanguard are taking the wraps off their new direct to customer offering - wonderful

    https://www.ft.com/content/6821ce50-3976-11e7-821a-6027b8a20f23

    I know that this has been on the cards for some time, but it's nice to see some specifics confirmed (0.15% admin costs for £500+)

    Another article:

    https://www.theguardian.com/business/2017/may/16/vanguard-funds-investment-isa-uk-fees-hargreaves-lansdown-fidelity
    Last edited by edinburgher; 16-05-2017 at 8:24 AM.
Page 8
  • jamesd
    Buying a tracker is saying "why take the risk of trying to pick a 1 in 10 fund manager that can beat the market? When anyone can pick a vast array of vanilla low cost trackers that will provide returns in line with the market.

    Calling the VGLS funds expensive is somewhat misleading as the funds suggested don't match any VGLS portfolio, nor do they auto-balance to the set asset allocation, doing this yourself costs time/money and can quickly eat away at any fee saving, your post didn't mention this.
    Originally posted by hennerz
    Anyone can pick say a tracker charging 1.5% a year. Or one charging 0.05% a year. The average tracker isn't cheap, it's sold to customers with limited choices, say because their pension has been picked by their employer. In just the same way as either of us is not going to pick a 1.5% tracker, I'm not going to pick a managed fund that's underperformed every year for decades.

    What we will both do is first eliminate the junk from consideration. That eliminates most of the trackers and most of the active funds and leaves a much better pool to select from. I don't care that 75% of the trackers or active funds are normally in the bottom 75% because I'm not going to buy them. Well, unless they are there because they are doing something that I want, like delivering low volatility or something else useful to me.

    The funds I pointed to can be used to build a DIY comparable set at about half the price of LifeStrategy, while also offering the opportunity to do a range of other useful things like varying sector or country weights if desired. If the other costs make sense it's a potentially useful way of saving a bit of money. Or they can be used to beat Vanguard's other funds handily, since they aren't usually cheapest.
    • Glen Clark
    • By Glen Clark 19th May 17, 8:46 AM
    • 3,740 Posts
    • 2,730 Thanks
    Glen Clark
    Whats the point of paying a platform fee to hold funds, when you can hold ETFs in another platform without any fees?
    For society to function well, people generally need to feel that they have a fair chance of success through their ability and efforts. The more entrenched hereditary elites we have, the less likely people are to feel that way
    • SnowMan
    • By SnowMan 19th May 17, 9:23 AM
    • 3,110 Posts
    • 5,776 Thanks
    SnowMan
    Don't know if it has been mentioned but the Vanguard official timescale for offering a SIPP is

    https://www.vanguardinvestor.co.uk/need-help (search for SIPP)


    Do you offer a SIPP?


    No, SIPPs are not part of our offer at the moment. However, we are planning to add a Vanguard SIPP within the next year
    I came, I saw, I melted
    • greenglide
    • By greenglide 19th May 17, 9:31 AM
    • 2,735 Posts
    • 1,729 Thanks
    greenglide
    Whats the point of paying a platform fee to hold funds, when you can hold ETFs in another platform without any fees?
    What is the point of buying Heinz rather any other brand of baked beans or tomato soup or .....

    To me the Vanguard offering is a shop that only sells one brand through their own shop.

    Would you shop at a retailer that only sold, say, the Crosse & Blackwell brand of foods and nothing else?
    Last edited by greenglide; 19-05-2017 at 9:33 AM. Reason: typo
    • koru
    • By koru 19th May 17, 9:44 AM
    • 1,241 Posts
    • 625 Thanks
    koru
    I don't care that 75% of the trackers or active funds are normally in the bottom 75% because I'm not going to buy them.
    Originally posted by jamesd
    If it were true that the funds in the bottom three quartiles normally stay there then yes it would be easy to pick the ones that will outperform. But I thought the studies about persistence of performance (such as the ones cited by the FCA in their report last year) show that previous outperformance does not tend to persist?

    www.fca.org.uk/publication/market-studies/ms15-2-2-interim-report.pdf

    The FCA say (6.47): "There is little evidence of persistence in outperformance in the academic literature. ...previous UK academic analysis has found that the majority of funds with historical outperformance do not continue to outperform the relevant market index or peer group for more than a few years. By contrast, where performance persistence has been identified in the literature, it is poor performance persistence..."

    By poor performance, they seem to mean bottom quartile, not bottom three quartiles.

    They provide their own figures in 6.52, which they say provide evidence of persistence of poor performance, though I don't really see why. It shows that of the funds with bottom (4th) quartile performance in 2006-2010, 34.6% closed during 2011-15, but of the survivors way more than half outperformed during the second period (top two quartiles). That doesn't look like persistence to me, though it does look like a very high failure rate.

    Those same figures show that by avoiding the bottom 3 quartiles for 06-10 (ie, by picking from the top quartile), you had only a 24.4% chance of your pick still being in the top quartile in the next five years. The figures seem to show it isn't as easy as you suggest.
    koru
    • Glen Clark
    • By Glen Clark 19th May 17, 9:55 AM
    • 3,740 Posts
    • 2,730 Thanks
    Glen Clark
    What is the point of buying Heinz rather any other brand of baked beans or tomato soup or .....

    To me the Vanguard offering is a shop that only sells one brand through their own shop.

    Would you shop at a retailer that only sold, say, the Crosse & Blackwell brand of foods and nothing else?
    Originally posted by greenglide
    I like Vanguard and would be happy to hold all my equity allocation in Vanguard funds
    But why pay a fee to do that when there are other platforms where I hold their ETFs for free.
    For society to function well, people generally need to feel that they have a fair chance of success through their ability and efforts. The more entrenched hereditary elites we have, the less likely people are to feel that way
    • Glen Clark
    • By Glen Clark 19th May 17, 10:00 AM
    • 3,740 Posts
    • 2,730 Thanks
    Glen Clark
    What is the point of buying Heinz rather any other brand of baked beans or tomato soup or .....
    Originally posted by greenglide
    Slightly off topic but its a good question, because cheaper brands have come out better in blind taste tests.
    Present kids with cereal boxes etc and they pick the brand leader. Present them with the unwrapped product and they usually don't.
    For society to function well, people generally need to feel that they have a fair chance of success through their ability and efforts. The more entrenched hereditary elites we have, the less likely people are to feel that way
    • kidmugsy
    • By kidmugsy 19th May 17, 11:15 AM
    • 9,375 Posts
    • 6,145 Thanks
    kidmugsy
    Slightly off topic but its a good question, because cheaper brands have come out better in blind taste tests.
    Present kids with cereal boxes etc and they pick the brand leader. Present them with the unwrapped product and they usually don't.
    Originally posted by Glen Clark
    I learnt that when I was in short trousers and took the Pepsi Taste Challenge, or whatever exactly it was called. Lo, Pepsi did indeed taste better than Coke. It was many years before I learnt that that sort of "blind trial" was more advanced than much medical research of the day.

    On the other hand journalists keep assuring me that the same is true of wine tasting. But I have run several "blind" wine tasting sessions, and not once has vox pop failed to pick out the most expensive wine as best. Of course, I have first ensured to the best of my ability that every wine in the set is the best known to me at its price point.
    Last edited by kidmugsy; 19-05-2017 at 11:18 AM.
    • ChopperST
    • By ChopperST 19th May 17, 1:37 PM
    • 1,059 Posts
    • 722 Thanks
    ChopperST
    Just transferred x 2 JISAs. Spoke to them on the phone - straight through to a human who answered all my queries so they seem up on customer service. They also asked if there were any funds other than Vanguard I hold as they were looking for feedback as to other funds they should be offering, if enough people ask - they will look into it apparently.
    • BillTee
    • By BillTee 19th May 17, 3:14 PM
    • 20 Posts
    • 11 Thanks
    BillTee
    Fidelity

    I still have other investment with Fidelity but I have a respect for Vanguard,
    Originally posted by thetimewill
    I'm considering Fidelity for a SIPP but concerned over transfer out/drawdown charges. Potential for charges through their Retirement Services section according to terms:

    "If you’re accessing benefits withdrawal options through Fidelity, you are required to have an initial discussion with Fidelity’s Retirement Service... if they consider it necessary for advice to be given or transfer would adverse" charges would then apply.

    Have you had any experience of Fidelity trying to supplement costs in this way?
    • thetimewill
    • By thetimewill 19th May 17, 3:33 PM
    • 40 Posts
    • 6 Thanks
    thetimewill
    Hello BillTee,
    I have a SIPP with Fidelity and I understand there is no charges/fees upon withdrawals/transfers. I have read this in their fee information details and also been told this via phone call. There may be charges if you make use of their retirement specialists as they offer advice. I am DIY.
    Regards
    Billy
    Last edited by thetimewill; 19-05-2017 at 3:33 PM. Reason: spelling
    • TheTracker
    • By TheTracker 19th May 17, 10:05 PM
    • 1,060 Posts
    • 1,057 Thanks
    TheTracker
    Good news, this, albeit too expensive for me as it is.

    A well calculated charge - expect it to drop, with fanfare, 3 or 4 times a year for the next 3 or 4 years.
    • StellaN
    • By StellaN 19th May 17, 10:22 PM
    • 141 Posts
    • 40 Thanks
    StellaN
    Good news, this, albeit too expensive for me as it is.

    A well calculated charge - expect it to drop, with fanfare, 3 or 4 times a year for the next 3 or 4 years.
    Originally posted by TheTracker
    We can always dream but if it happens then great!
    • BananaRepublic
    • By BananaRepublic 22nd May 17, 7:36 AM
    • 819 Posts
    • 574 Thanks
    BananaRepublic
    Slightly off topic but its a good question, because cheaper brands have come out better in blind taste tests.
    Present kids with cereal boxes etc and they pick the brand leader. Present them with the unwrapped product and they usually don't.
    Originally posted by Glen Clark
    That might be because many cheaper brands have more sugar, which appeals to kids. Generally brands are better quality, but there are exceptions. M&S and Waitrose own brands are often better, and surprisingly Aldi produce can be very good indeed, and better than known brands, but it can also be worse.

    Anyway, I ignore taste tests, as I find I usually have different tastes. After all, most people can eat Mars bars, but I find them inedible.
    • BananaRepublic
    • By BananaRepublic 22nd May 17, 8:55 AM
    • 819 Posts
    • 574 Thanks
    BananaRepublic
    I did not mean to say that you did not actually end up on the plus side of the market, just that forums and not places for absolute rigor.

    The average person will not have the knowledge (I'd still ascribe a lot of luck) to consistently choose the right funds and make the right trades.
    Originally posted by bostonerimus
    I don't doubt that you are right. That is why mediocre funds continue to sell. But also many are in pension funds, recommended by advisors paid for by companies as part of the compensation package.

    Undoubtedly there are people who have long track records of success and there are also those with long track records of failure, but some in the middle and the difficulty comes in backing the right horse at the right time and for the average investor it's simply not worth it.
    Originally posted by bostonerimus
    My experience is that it is quite easy. And if someone does not want to spend time learning, then they can hire an IFA to do the leg work for them. Yes that adds an overhead, but I suspect it is worth it. Those here with experience of funds managed by an IFA are better placed to comment on that.

    Given the historical lack of low cost index funds in the UK you last sentence has a ring of truth about it. There hasn't been much time or data to compare active vs passive in the UK, but with low cost tracker options now readily available I expect to see studies and that the results will mirror those of the US.
    Originally posted by bostonerimus
    Actually UK index funds have been around for decades. They were very trendy under Blair, who tried to ban advertising based on past performance. There is plenty of evidence that UK active funds do better than US ones relative to trackers in their respective markets.
    • Audaxer
    • By Audaxer 22nd May 17, 8:57 AM
    • 250 Posts
    • 73 Thanks
    Audaxer
    I don't doubt that you are right. That is why mediocre funds continue to sell.
    Originally posted by BananaRepublic
    I would prefer index trackers but as I am now retired and looking for income as well as growth I was going to select a diverse group of income funds for 50% of my portfolio. What is the best things to look for when researching funds and ITs to ensure you don't end up with mediocre funds?
    • BananaRepublic
    • By BananaRepublic 22nd May 17, 9:56 AM
    • 819 Posts
    • 574 Thanks
    BananaRepublic
    I would prefer index trackers but as I am now retired and looking for income as well as growth I was going to select a diverse group of income funds for 50% of my portfolio. What is the best things to look for when researching funds and ITs to ensure you don't end up with mediocre funds?
    Originally posted by Audaxer
    At the risk of stating the obvious, do be aware that there is always the risk with stock market investments that a crash will occur, and to avoid crystallising losses, you will have to keep them in the market for longer than intended, waiting for the recovery.

    The way I research funds is simply to look at long term performance over 5 and 10 years. I look for not only high performance, but consistency. Thus a fund might have a high value to to one outstanding year, and many mediocre years. That suggests luck might have played a role in the outstanding year. Consistent performance suggests an underlying soundness.

    Of course you also have to select sectors, and it is advisable to spread money across mutiple sectors, such as US, UK and Europe, and multiple funds in those sectors, in order to reduce risk. Different regions will behave differently, thus Far Eastern markets tend to be more volatile, but can offer high gains, and then there are the emerging markets.

    Incidentally, since you prefer trackers, you could always go for an income tracker.
    • Pincher
    • By Pincher 22nd May 17, 10:13 AM
    • 6,516 Posts
    • 2,490 Thanks
    Pincher
    BBC Radio 4 Moneybox
    They did a segment on the Vanguard Launch.

    http://www.bbc.co.uk/programmes/b08qxd06

    About 10 minutes into the program.

    Sean Hagerty from Vanguard speaks.


    Moneybox interviewed John Bogle in 2016:

    http://www.bbc.co.uk/programmes/b081qyxh


    Isn't mutualism like communism? How did he not get lynched in America?
    • Linton
    • By Linton 22nd May 17, 10:46 AM
    • 7,976 Posts
    • 7,787 Thanks
    Linton
    I would prefer index trackers but as I am now retired and looking for income as well as growth I was going to select a diverse group of income funds for 50% of my portfolio. What is the best things to look for when researching funds and ITs to ensure you don't end up with mediocre funds?
    Originally posted by Audaxer
    - Focus on geting as broad a coverage as possible of types of asset (bonds/property/equity/ anything else you can find), geographies, industries, company sizes in your overall portfolio. There is good income to be achieved outside the UK as well as inside.
    - you should aim for every fund having a clear and unique purpose.
    - look at performance data in order of priority:
    - - consistency
    - - least bad performance in the bad times - trustnet charting can show you details of the 2008 crash.
    - - high performance overall
    - avoid new funds
    - avoid very small funds

    Trackers generally are not particularly good for income. For equity income investing you need:
    - underlying holdings in companies that generate sufficient consistent profit to support a long term high dividend yield.
    - to avoid companies that are showing a high dividend yield because their share price has crashed.
    - to achieve good diversification across sectors.

    In my view this sort of filtering needs human intervention.

    For an example of how things can go terribly wrong I suggest you investigate what happened to the iShares UK Dividend ETF (IUKD) during the 2008 crash. It dropped around 70% from its maximum attained a few months previously. Even with dividends reinvested it only passed its pre 2008 maximum around late 2014. If you had taken dividends as income you would still be about 30% down on capital value.
    • edinburgher
    • By edinburgher 22nd May 17, 11:21 AM
    • 10,666 Posts
    • 55,357 Thanks
    edinburgher
    I know it's a minority of posters who are having an extended argument about passive vs. active, but could we possibly drop it and return to discussing Vanguard's D2C offering?

    I have requested a transfer of my daughter's small JISA (we hold most of her money in adult ISAs) and it was an entirely painless experience. Very clear forms, smooth process and just the right amount of communication. A good start.
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