going down

Andy Goldsworthy

Andy Goldsworthy                                                                                                     photo: iurikothe 

competitive pressure

It’s good to see competitive pressure in action once again as Vanguard has just announced a reduction in charges for 23 of their funds of around 20% with effect from the 3rd December 2013.

As we mentioned in passive investment takes off we have seen Legal & General reduce the On-going Charge on their funds twice in 18 months.  And now Vanguard too.

future perfect portfolios

Of particular interest for future perfect clients is the reduction in charges on the Vanguard FTSE Developed World from 0.30% to 0.25% and on the Vanguard Global Bond Index funds from 0.25% to 0.20%.

small reduction, big impact

That may only be a relatively small reduction, but the effect compounded over the years will have a larger effect than you may think.

We have calculated that for a client with a £1m portfolio invested in FP60 (60% equity, 40% fixed interest), for example, their investment pot in ten years’ time will be £1,600 larger due to this single charge reduction.  That’s £1,600 in your pocket, rather than the investment manager’s.

This is based upon the reduction in just these two funds of a portfolio of 13 funds.  Our expectation is that this trend will continue and there will be further reductions of On-going Charges by investment managers in the future.

This of course can only be good news for you!

the photo

The photo accompanying this post is of an artwork by the wonderful and highly influential land artist Andy Goldsworthy.  Andy uses only his bare hands and makeshift tools found at the site of his artworks to prepare and arrange the materials for his beautiful, ephemeral pieces.

You can see more of Andy’s work here or get an insight into how he creates his pieces from this short film with the Sunday Times art critic Waldemar Januszczak.

any questions

If you’ve got a query about this, or any other aspect of your financial life, Nick would be delighted to help.  You can email him on nick@futureperfectfp.co.uk.

the small print

This commentary is provided for information purposes only and does not constitute advice to invest or not invest  Advice should always be obtained from an adviser before the decision to invest or sell is taken.  Past performance is not a guide to future performance.