Alternatives to the Vanguard platform and Life Startegy 100 fund

dunstonh

I hold VLS100 in my sipp as does my wife so I’ve read this thread with great interest. Some really good points have been made with some food for thought so thank you to the contributors.

If you have a real SIPP, you will have access to the whole of market and can pick a global tracker to replace it.  If its a pretend SIPP, then you may not have that choice (i.e.SIPP in marketing but not actually a SIPP)

No idea if the heavier U.K. weighting will be good, bad or indifferent!

in 2022 it was a good thing.  For most of the previous 15 years it was not.

MK62

Rt90 said:

No idea if the heavier U.K. weighting will be good, bad or indifferent!

.....nobody else has any real idea either....

GeoffTF

masonic said:

NoMore said:

masonic said:

The Vanguard platform is best suited for those with smaller amounts to invest, and for smaller portfolios the price of being able to conveniently buy a single fund solution is negligible. As a portfolio grows in size, the incentive to switch to a different provider and different holdings becomes more compelling. Paying 0.15% of a large portfolio every year as a platform fee itself looks unattractive by the time you have reached a 6 figure investment, and even before that, shaving 0.1% off your fund fees starts to look attractive. So it is just good moneysaving to evolve the strategy over time to use the best tools to fit your circumstances. With the likes of Trading212, InvestEngine etc, it's possible to start with an ETF portfolio in a cost efficient manner from the outset, but when it is just a matter of a few quid and a shorter learning curve, the likes of Vanguard still looks to be a sound suggestion for a newbie to start their investment journey.

In a way I take some relief from the fact we seem to have moved on to discussions of shaving small percentages off fund fees. It's progress compared to the era when dunstonh was explaining to people how to make a DIY Guaranteed Equity Bond using a cash and S&S ISA.

Vanguard fees are capped at £375 per year for accounts over £250,000. Not dismissing your argument, they probably are still expensive at that pot size but just pointing out at some point they stop charging a %based fee and switch to fixed fee.

Yes, I'd consider £375 per year to be quite extortionate. You can get free regular investing and 12 sells a year for a third of the price at Interactive Investor, which I wouldn't class as cheap, but offers some additional services that can make them worth the expense. You'd need to clock up 75 trades at iWeb to pay that sort of money. Even the likes of Hargreaves Lansdown can be used for exchange traded investments for a fraction of that cost if trading infrequently. I'd generally suggest people start looking around for better alternatives from the point the fees tip over the £100 mark if they haven't done so before.

Here are iWeb's SIPP charges:

https://www.iweb-sharedealing.co.uk/our-accounts/self-invested-personal-pension/sipp-charges.html

A SIPP of more than £50K in flexi-access drawdown will cost more than £375 p.a. If you just have an ISA, Vanguard can be expensive.

Alexland

GeoffTF said:

LifeStrategy 100 0.22%
VWRL 0.22%
Vanguard Global All Cap 0.23%

These funds are all very popular, so Vanguard charges a premium price for them. As I have said, we can save money by using a developed world tracker and adding an emerging markets tracker, and a UK tracker if we want a home bias. (If you prefer funds rather than ETFs you can use Vanguard Developed World ex UK. VFEM is a better partner for this fund than the emerging markets OEIC, which will duplicate South Korea.)

I'd argue you don't need the circa 10% EM exposure for a fund to be considered a 'global tracker' and a developed world only ETF such as VEVE at 0.12% is perfectly adequate providing lots of diversification and it's even available to trade and hold in an ISA for free on InvestEngine which is probably now a safe enough platform for small amounts.

Compared to holding one of these more expensive funds on Vanguard at 0.37% total the 10% EM proportion would need to deliver 0.25% annual outperformance across the whole account valuation to break even (ie the presence of EM generating a 2.5% pa higher return).

GeoffTF said:

Here are iWeb's SIPP charges:

https://www.iweb-sharedealing.co.uk/our-accounts/self-invested-personal-pension/sipp-charges.html

A SIPP of more than £50K in flexi-access drawdown will cost more than £375 p.a. If you just have an ISA, Vanguard can be expensive.

Yeah iWeb's SIPP is not attractive. I'd agree with Masonic that £100 pa is the upper limit that anyone should be paying per investment account and even then it would have to be a large account to be worth it (eg my Fidelity SIPP has gone up to nearly £100 pa inc trades but that's only 0.02% of the account valuation) . As such the £375 cap from Vanguard is too high to be attractive even if someone had a large GIA, ISA and SIPP with them.

VXman

Interesting discussion here on costs.

So would there be a cheaper platform for me in this situation...?

Me - £13000 in a VLS60 GIA

Wife £105,000 in a Target2025 Pension and £7500 in a VLS20 GIA

Alexland

VXman said:

So would there be a cheaper platform for me in this situation...?

What frequency of trades are you doing in these accounts?

Futuristic

VXman said:

Interesting discussion here on costs.

So would there be a cheaper platform for me in this situation...?

Me - £13000 in a VLS60 GIA

Wife £105,000 in a Target2025 Pension and £7500 in a VLS20 GIA

For your wife yes, probably already posted here: Broker comparison: cheap investment platforms UK (monevator.com)

Interactive Investor would be good option.

Monevator also mentions you should consider a fixed fee platform when you have £20k+ in the ISA but depends on how many trades you do of course. 

GeoffTF

Alexland said:

GeoffTF said:

LifeStrategy 100 0.22%
VWRL 0.22%
Vanguard Global All Cap 0.23%

These funds are all very popular, so Vanguard charges a premium price for them. As I have said, we can save money by using a developed world tracker and adding an emerging markets tracker, and a UK tracker if we want a home bias. (If you prefer funds rather than ETFs you can use Vanguard Developed World ex UK. VFEM is a better partner for this fund than the emerging markets OEIC, which will duplicate South Korea.)

I'd argue you don't need the circa 10% EM exposure for a fund to be considered a 'global tracker' and a developed world only ETF such as VEVE at 0.12% is perfectly adequate providing lots of diversification and it's even available to trade and hold in an ISA for free on InvestEngine which is probably now a safe enough platform for small amounts.

Compared to holding one of these more expensive funds on Vanguard at 0.37% total the 10% EM proportion would need to deliver 0.25% annual outperformance across the whole account valuation to break even (ie the presence of EM generating a 2.5% pa higher return).

It is reasonable to just have developed word tracker. Adding 10% VFEM only marginally increases the overall percentage cost. Adding some UK bias reduces the overall percentage cost and also reduces the overall withholding tax percentage. A developed world tracker has a huge US weighting and not everyone is happy with that. You pays your money and you takes your pick.

masonic

GeoffTF said:

A developed world tracker has a huge US weighting and not everyone is happy with that. You pays your money and you takes your pick.

Which is why I've opted for regional trackers, but care does need to be taken with respect to trading costs if going down that route.

Alexland

GeoffTF said:
A developed world tracker has a huge US weighting and not everyone is happy with that. You pays your money and you takes your pick.

True but then a lot of those US companies are actually International businesses who choose to list there which makes it easier to accept the weightings.