View more on these topics

Vanguard: Platform frustration drove pricing model change

Coins-Money-Currency-Calculator-Finance-Business-700.jpgVanguard says platforms frustrated by its dilution levies were a driving force behind its switch to swing pricing, while it argues investors should see total expense ratios come down from the move.

The change came into place across its UK and Dublin-domiciled funds this month, but will not apply on ETFs.

Marketing head Nick Blake says platforms had operational difficulties with the dilution levies that Vanguard previously used.

“Swing pricing is the norm in the UK and Europe so most platforms weren’t set up to deal with paying an additional dilution levy and reflecting that in contract notes.”

Blake adds there was a perception problem with dilution levies.

“Unfortunately some people often thought that was a charge that we were collecting as Vanguard the management company. We had to keep reminding people that it went back into the fund.”

Swing pricing also directs money back into the fund to offset costs, although Blake notes it too has viewed negatively in the past.

“There was a time many years ago when people worried about the opaqueness of swing pricing, but with all the transparency we’ve got coming now with costs and charges we’re comfortable clients can see the full effect of these dilution approaches.”

Blake stresses intermediaries and investors will not be impacted by the change.

“If you do have someone who chooses to come in and out of the fund fairly regularly that’s fine. They’ll now be enjoying the swing price – the entry or exit NAV on those days,” says Blake.

“The key thing is there are no residual costs that are being borne by the ongoing investors in the fund.”

In fact, information sent to investors about Vanguard’s changes says total expense ratios should go down.

Vanguard told investors the switch could attract more inflows as the model is preferred over other available methods.

L&G, Fidelity, JPMorgan Asset Management and Goldman Sachs Asset Management already adopt the swing pricing model and Jupiter will introduce it to their unit trust range in January 2018.



Vanguard launches European ETF as it expands in Germany

Vanguard is offering a new ETF tackling European companies as it opens access to its funds in Germany. The Euro STOXX 50 Ucits ETF, which is listed on the London Exchange and Deutsche Boerse, will charge 0.10 per cent. The fund invests into the 50 largest multi-national European companies in the Eurozone and cover various […]


Vanguard changes pricing structure on mutual funds

Vanguard says the move follows feedback from platforms Vanguard has changed the pricing structure across its mutual funds to align it with the way costs are calculated among its peers. Funds across Vanguard’s UK and Ireland domiciled fund ranges now use swing pricing rather than single pricing, meaning that if the fund’s investors make large […]


Vanguard fund fees won’t drop from Mifid II decision

It is understood there will be no direct savings for Vanguard investors Vanguard will not be dropping its fund fees despite its decision to absorb research costs under Mifid II. The $4.4trn fund manager led its US rivals on making a decision on research costs in August. But Money Marketing sister title Fund Strategy understands there will be no […]


Vanguard platform scoops £250m in first five months

US fund giant Vanguard has attracted more than £253m from investors since launching its platform in the UK in May. The direct-to-consumer offering was set at a minimum monthly contribution of £100 and/or a £500 lump sum, with fees at 0.15 per cent before fund charges. Account fees are waived above the first £250,000 invested, […]

Benefits - thumbnail

Global benefits predictions for 2015 from Jelf International

According to Doug Rice, managing director of international services, in 2015, managing their international duty of care will become an increasing focus for UK-based overseas organisations in both managing their short- and longer-term challenges. As a result, strong independent advice and innovative technological solutions will become more important than ever in managing their global benefits.


News and expert analysis straight to your inbox

Sign up


    Leave a comment