Vanguard Scraps Extra Fees On LifeStrategy Funds

The £2 billion funds will no longer charge the upfront 0.10% so-called pre-dilution levy to investors  

Editor, Europe
Reviewed by: Rachael Revesz
Edited by: Rachael Revesz

Vanguard’s £2 billion passive LifeStrategy fund range will no longer charge investors an upfront fee of 0.10 percent, called a pre-dilution levy to help seed new client money without altering existing customers’ units,

The LifeStrategy range was launched in 2011 and consists of five multi-asset portfolios of Vanguard’s index trackers and exchange traded funds (ETFs). Each portfolio has between 20 percent and 100 percent equity, depending on the level of risk, and has an ongoing charge of 0.24 percent.

Nick Blake, head of UK retail, said in a statement: “As our funds grow in size and we broaden our presence in the UK, we will continue to leverage operating efficiencies and use our increasing scale to lower costs for investors.”

The previous dilution levy was used to offset transaction costs brought about by clients investing in new shares in the funds, which generated local taxes or potentially wide dealing spreads in illiquid asset classes. This levy was paid directly to the fund.

The funds used to cost as much as 0.33 percent for annual management fees in early 2014, before reducing to 0.29 percent, and now 0.24 percent per year. In September 2014 the firm also lowered costs on its ETF range, bringing annual fees to between 0.07 percent and 0.29 percent.

Vanguard was awarded the ETF of the Year for its S&P 500 UCITS ETF (VUSA) in April at the London Transport Museum ceremony.

Rachael Revesz joined in August 2013 as staff writer. Previously an investment reporter at Citywire, she has a background in writing content for retail financial advisors and has covered a wide range of subjects in finance. Revesz studied journalism at PMA Media, which has since merged with the Press Association. She also holds a B.A. in modern languages from Durham University, as well as CF1 and CF2 financial planning certificates from the CII.