Vanguard, the low-cost US asset management behemoth, has reached a critical milestone in its attempt to disrupt the fiercely competitive UK retail funds market. Assets on its recently launched funds platform breached £1bn for the first time.
The Pennsylvania-based company, which manages more than $5.3tn in assets globally, has broken through the billion-pound level just 18 months after launching its direct investment service for UK investors.
Vanguard’s platform significantly undercuts some of its larger competitors such as Hargreaves Lansdown, the FTSE 100 retail broker.
Nick Blake, head of personal investing in the UK at Vanguard, called the £1bn figure “a great start”.
Vanguard’s push into the UK’s retail market last year caused concern among established UK rivals. A senior executive at one competitor called the pace at which it was gathering assets “frightening”.
Other platforms have taken much longer than Vanguard to reach a similar level of assets. Nutmeg, a rival online platform backed by Schroders, the listed asset manager, took five years to gather £600m of assets after it was launched in 2012.
Blake said: “As we’d hoped, the service is being used by all levels of investors, from those new to investing to experienced investors with substantial assets.”
Vanguard charges investors an annual account fee of 0.15% in addition to underlying fund charges, although this fee is capped at £375. Users can invest a minimum lump sum of £500 or a minimum monthly amount of £100.
According to the asset manager, one in three of its platform customers invest via a monthly savings plan, with its US Equity Index fund and range of exchange traded funds proving to be the most popular.
The platform has proved a success with younger investors, with 43% of its investors under the age of 35.