Different Investing Platform

GeoffTF

Albermarle said:

GeoffTF said:

Just for the fun of it, I thought I would compare the cost of using Vanguard's platform to buy an ETF in an ISA each month with that of using Fidelity's platform. Fidelity is Vanguard's old rival. For Fidelity the platform fee is a maximum of £45 p.a. Regular savings or withdrawal costs £1.50 per transaction. That is a total of £45 + 12 * £1.50 = £63 for twelve transactions. Break even with Vanguard's 0.15% is £42,000. For a portfolio of £250,000 Vanguard charges £375, which is nearly 6 times what Fidelity charges. That is bonkers. Nonetheless, it has to be said that Vanguard's platform is growing rapidly, both in terms of its number of users and its AUM.

I have no idea of the actual numbers, but I think the large majority of investors use OEIC funds , so the above calculation does not really apply to them .
Vanguard is probably the cheapest option for small/medium size investors buying popular funds like Life Strategy and the target retirement funds. Also they advertise a lot .
I read an article about that Vanguard strategy is changing ( globally , not just in UK ) . The basic low cost offering that they 'invented' is just not very profitable, and hence the branching out into offering financial advice amongst other developments ( can not remember all the details )

I expect that you are right in saying that most retail investors use OEICs rather than ETFs. Nonetheless, they will often be able to save money by switching to ETFs, or at least have a wider choice of cost effective platforms.

Vanguard does not offer an ETF version of LifeStrategy in the UK (but it does so elsewhere). The people who use LifeStrategy here would have some learning and work to do to achieve the same exposure using ETFs. LifeStrategy is for people who are not up to that.

Vanguard has loaded the cost of LifeStrategy because it knows that it can charge more for this product. Vanguard has also loaded the cost of All-World trackers. It is cheaper to buy a developed world tracker with the market weight of an emerging market tracker, but you have to be savvy to do that. Again, Vanguard knows that it can charge more for the All-World tracker.

The break-even point for hosting LifeStrategy on iWeb rather than Vanguard is about the same as in my Fidelity example if they are doing 12 trades per year, and less if they are doing fewer trades. Nonetheless, Lloyds/Halifax/iWeb and Interactive Investor appear to be the only two platforms that host open ended funds for a fixed price (unless you count Vanguard at £375 p.a.).

Vanguard is a not for profit organisation. The issue is using less price sensitive business to subsidise index fund management. Here is an article on this topic:

https://www.morningstar.com/articles/1071801/has-vanguard-lost-its-way

I think that it is fair to say that Vanguard is less idealistic than it was in John Bogle's day, but it is still cleaner than most of the competition. I can either call Vanguard unethical, or be pleased that I am profiting at the expense of less savvy investors.

maxsteam

wmb194 said:

Okay, you don't really understand but that's irrelevant, the point is that its name is Freetrade, not Freetrade.io as you stated.

Haha. One of us doesn't understand.

Freetrade House Ltd is a property company. FreetradeMarket Ltd is an advertising agency, Freetrade Ventures Ltd was an auctioneer, Free Trade Consulting Ltd is a financial manager, Free Trade Ltd (with a space) is a dormant company, Free Trade Beers Ltd is a drinks wholesaler, etc. etc.. There are many companies than can be, and are, referred to as "Freetrade" but there is only one Freetrade.io website and there is only one Freetrade Ltd in the UK.

Within a limited sphere, for example the office of one of the companies listed above, "Freetrade" or "IO" may have a clear meaning, it is important to be aware that life exists outside such limited spheres.

There are many political spheres where free trade is discussed at great lengths by people who are unaware of a new UK share dealing service (see freetrade.org).

The assignment of domain extensions is overseen by ICANN. While it may be fun to play with the letters, the assignment of certain extensions, including .io, was made specifically so that certain countries can have their own extension. Again, within one particular sphere "io" means "if only" but in the context of a domain extension, the letters have been assigned by ICANN to the British Indian Ocean Territory.