Question on Vanguard charges

Froggitt2

So the LS 80% fund has as its five largest holdings

5 Holdings	Sector	%
Vanguard FTSE Dev Wld ex-UK Eq I...		19.39
Vanguard U.S. Eq Idx £ Acc		19.33
Vanguard FTSE UK All Shr Idx Uni...		18.86
Vanguard Glb Bd Idx £ H Acc		14.17
Vanguard Em Mkts Stk Idx £ Acc		6

The LS80% fund has a 0.22% annual charge, if the funds in its portfolio also have an annual charge of say 0.22%, does that double dipping lead to a charge of 0.44% for a bunch of index trackers? Do all companies funds operate in the same way? Would replicating their portfolio lead to 50% lower charges?

eskbanker

No, there's no double dipping - if LS80 quotes a charge of 0.22% then that's what you pay, not 0.44%.

Froggitt2

eskbanker said:

No, there's no double dipping - if LS80 quotes a charge of 0.22% then that's what you pay, not 0.44%.

But look at the funds it invests in, eg the top one FTSE Dev World ex UK, that has a 0.14% charge. Is that fund taking its charge, and then the LS80 fund taking its charge? 

coyrls

Froggitt2 said:

eskbanker said:

No, there's no double dipping - if LS80 quotes a charge of 0.22% then that's what you pay, not 0.44%.

But look at the funds it invests in, eg the top one FTSE Dev World ex UK, that has a 0.14% charge. Is that fund taking its charge, and then the LS80 fund taking its charge? 

No it is not.

MX5huggy

No it’s 0.22%, lots of funds use other funds as components of that funds you’d probably find funds that use funds of other funds. 

What you have found is that if you held all the different funds in LS80 your total fee would be less than 0.22%

Albermarle

Vanguard are not going to run their Life Strategy funds for free. If you want to buy your own trackers, rebalance them etc you will maybe save 0.1% as a maximum.
Most people are happy to pay Vanguard to do this for them, as they would not how to do it/couldn't be bothered.
To put it in context many managed funds charge five times or more.
Perhaps more to the point is that you can buy similar funds to Lifestrategy from other providers for < 0.22%

dunstonh

The OCF, Transaction Charges figures and incidental charges cover the total costs of the funds 

VLS has a total charge of 0.26%  (0.22% OCF, 0.04% TC and 0.00% IC)
The individual funds within it are around 0.10-0.15% OCF with around 0.01% TC and 0.00% IC)

The VLS charge includes the underlying fund charges and is not incremental.  The difference is to allow for the extra work they have to carry out.