Monday, 31 March 2014 11:18
HL welcomes Vanguard cut to passive fund costs
Passive investing was given a boost today with news that Vanguard is cutting entry costs on two funds – a move welcomed by Hargreaves Lansdown.
Vanguard is reducing the 'entry' charges for its investors putting money into its UK equity funds.
The funds now charge a dilution levy of 0.4%, formerly this was set as 0.5%, following the scrapping of Stamp Duty Reserve Tax (SDRT).
The funds are:
• Vanguard FTSE U.K. Equity Income Index Fund- Tracks FTSE All Share Index, TER= 0.15%
• Vanguard FTSE U.K. Equity Index Fund- Tracks FTSE U.K. Equity Income Index, TER= 0.25%
The dilution levy is charged to cover the funds' stamp duty costs, but has been reduced following the removal of SDRT on funds. Annual fees will not be affected.
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Adam Laird, passive investment manager at Hargreaves Lansdown, said: "This is the latest in a string of charge reductions, which is great news for investors. The change will make a real difference to those wanting to buy tracker funds in a last minute Isa.
"Investors should be aware however that Vanguard's FTSE All Share Index is not the cheapest fund available. For new investment, we suggest the Legal and General UK Index fund, which has an Annual Management Fee of 0.08% and Total Expense Ratio (TER) of 0.1% when purchased through Hargreaves Lansdown."
Vanguard is reducing the 'entry' charges for its investors putting money into its UK equity funds.
The funds now charge a dilution levy of 0.4%, formerly this was set as 0.5%, following the scrapping of Stamp Duty Reserve Tax (SDRT).
The funds are:
• Vanguard FTSE U.K. Equity Income Index Fund- Tracks FTSE All Share Index, TER= 0.15%
• Vanguard FTSE U.K. Equity Index Fund- Tracks FTSE U.K. Equity Income Index, TER= 0.25%
The dilution levy is charged to cover the funds' stamp duty costs, but has been reduced following the removal of SDRT on funds. Annual fees will not be affected.
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Adam Laird, passive investment manager at Hargreaves Lansdown, said: "This is the latest in a string of charge reductions, which is great news for investors. The change will make a real difference to those wanting to buy tracker funds in a last minute Isa.
"Investors should be aware however that Vanguard's FTSE All Share Index is not the cheapest fund available. For new investment, we suggest the Legal and General UK Index fund, which has an Annual Management Fee of 0.08% and Total Expense Ratio (TER) of 0.1% when purchased through Hargreaves Lansdown."
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