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Vanguard cuts LifeStrategy charges in passives price war

Vanguard Asset Management plans to harmonise the charges on its LifeStrategy funds at the end of the month.

The asset manager’s five ‘all-in-one’ portfolios, which are built from Vanguard’s low-cost index funds, will have an annual management charge of 0.29 per cent from 31 January.

The Vanguard LifeStrategy 20 per cent Equity fund already has an AMC of 0.29 per cent. But Vanguard LifeStrategy 40 per cent Equity, Vanguard LifeStrategy 60 per cent Equity, Vanguard LifeStrategy 80 per cent Equity and Vanguard LifeStrategy 100 per cent Equity currently charge between 0.30 per cent and 0.33 per cent.

The funds’ asset allocation policy will also be amended to better reflect Vanguard’s global investment philosophy. The new policy will adjust the exposure to developed and emerging market equities while introducing global bonds within fixed income exposure.

All costs and expenses relating to the conversion, as well as the dealing costs incurred in switched to the new asset allocation policy, will be covered by Vanguard at no cost to shareholders.

Bestinvest managing director Jason Hollands says: “This is a further skirmish in the passives price war where Vanguard have been a key combatant.”

The passives “skirmish” has seen recent moves such as Vanguard launch an exchange traded fund on the FTSE 100 with a total expense ratio of 0.1 per cent and Swip offering a FTSE All Share index tracker with a TER of 0.1 per cent, which is cheaper than rivals’ ETF versions.


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