Vanguard attracts under-30s to UK retail platform
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About 40 per cent of new clients on Vanguard’s personal investing platform in the UK last year were under the age of 30, according to the asset manager.
The $7.2tn asset management giant, which primarily sells passive funds, said its UK direct-to-consumer platform drew new clients “across all cohorts” but continued to “resonate with younger investors in particular”.
“This is particularly encouraging given the conjecture over the past few years that new and younger investors could be drawn to more speculative kinds of investing,” the company said.
“Both new and existing Vanguard UKPI [UK personal investing] clients have continued to demonstrate extremely strong investing behaviour, showing very few changes in trading behaviour in response to changing market conditions and instead sticking to their long-term plans. That momentum has carried through into the start of 2023,” it added.
Vanguard, which credits the success of its UK platform to its low-cost, long-term investment approach, attracted 118,000 clients in 2022 and net cash flow of £3.5bn.
The platform, which launched in April 2017, now has 485,000 clients and £15.2bn in assets under management.
Only Vanguard products are offered on the platform, amounting to 86 funds including active, index, exchange traded funds and its multi-asset range.
Investors are charged a platform fee of 0.15 per cent capped at a maximum of £375 a year and an average fund fee of 0.2 per cent plus transaction costs.
Mike Barrett, consulting director at The Lang Cat, said Vanguard had been “advertising heavily” since the platform’s launch, citing a YouTube video with 11mn views.
He said other asset managers and fund provider platforms including Hargreaves Lansdown, AJ Bell and abrdn-owned interactive investor, would be “looking closely at the type of client” Vanguard was attracting, seeing the firm as “way more of a threat” than small “robo” type offerings.
Barrett agreed that younger investors joining Vanguard was encouraging.
“Investing will always carry a risk, especially in the short term, but there is far less chance of self-harm investing in this sort of mainstream investments than some of the higher-risk trading [or] crypto-type services,” said Barrett.
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Bella Caridade-Ferreira, chief executive officer of Fundscape, said the direct to consumer (D2C) channel was “very small”, but she added Vanguard’s growth showed why vertical integration was an increasingly popular strategy for fund firms.
News of Vanguard’s new client base comes as the firm confirmed it was closing its UK financial planning arm in May this year, less than two years after its launch.
The firm failed to sign up enough clients to its £50,000 minimum investment service at an all-in annual cost of 0.79 per cent.
*Ignites Europe is a news service published by FT Specialist for professionals working in the asset management industry. Trials and subscriptions are available at igniteseurope.com.