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Jack Bogle would hate what Vanguard has become

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Re: Jack Bogle would hate what Vanguard has become

#11

Post by no-name-here »

benjaminklick wrote: post #4
ta9000 wrote: post #3

Fees on my passive investments there (mostly target date funds) seem to be as low as ever? I don’t care if they offer _more_ options as long as it doesn’t negatively impact their passive business.

Fair point. My thought is they are clearly spending money on tons of people they wouldn't have to if they were strictly passive. Presumably, if they didn't, the fees would be lower than they are now.

Isn't it equally likely the opposite - your comment presumes that Vanguard is using money from passive to prop up active, whereas it could also be that money from active is already being used to lower fees on passive?

Re: Jack Bogle would hate what Vanguard has become

#12

Post by benjaminklick »

SpicyLemonZest wrote: post #10
benjaminklick wrote: post #4

Earlier quoted context omitted.

Fair point. My thought is they are clearly spending money on tons of people they wouldn't have to if they were strictly passive. Presumably, if they didn't, the fees would be lower than they are now.

Why should we presume that? It seems equally likely that the fees would have to be higher if not supported by profitable cross-sales.

It's high risk. Sure, if active funds succeed. But active funds fail more often than they succeed.

Re: Jack Bogle would hate what Vanguard has become

#13

Post by benjaminklick »

no-name-here wrote: post #11
benjaminklick wrote: post #4

Earlier quoted context omitted.

Fair point. My thought is they are clearly spending money on tons of people they wouldn't have to if they were strictly passive. Presumably, if they didn't, the fees would be lower than they are now.

Isn't it equally likely the opposite - your comment presumes that Vanguard is using money from passive to prop up active, whereas it could also be that money from active is already being used to lower fees on passive?

And what happens if active fails? Then passive would take the hit even though people go with Vanguard specifically for the low-risk passive.

Re: Jack Bogle would hate what Vanguard has become

#14

Post by zeroonetwothree »

jglamine wrote: post #5

Fidelity has been killing it with their passive investing options. Zero expense ratio funds, cash management account. I am going to switch, will save perhaps 30k in fees over next few decades

The zero index funds have slightly more tracking error than the vanguard funds.

Also if you are in taxable I would be worried about being locked in if fidelity start charging fees on them.

I think vanguard is a safer bet to keep fees low long term.

And ultimately 4bps is irrelevant.

Re: Jack Bogle would hate what Vanguard has become

#16

Post by nly »

I hate the way Vanguard UK customers subsidize the US business (Fees are lower for US customers than UK ones on comparable funds)

They aren't the cheapest anymore in almost every category, but their brand recognition has exploded here in recent years.

Re: Jack Bogle would hate what Vanguard has become

#17

Post by benjaminklick »

nly wrote: post #16

I hate the way Vanguard UK customers subsidize the US business (Fees are lower for US customers than UK ones on comparable funds) They aren't the cheapest anymore in almost every category, but their brand recognition has exploded here in recent years.

Damn, what?! I didn't know the UK rates were higher. But yeah the old Vanguard brand that Bogle built is strong.

Re: Jack Bogle would hate what Vanguard has become

#18

Post by ta9000 »

benjaminklick wrote: post #12
SpicyLemonZest wrote: post #10

Earlier quoted context omitted.

Why should we presume that? It seems equally likely that the fees would have to be higher if not supported by profitable cross-sales.

It's high risk. Sure, if active funds succeed. But active funds fail more often than they succeed.

That’s a risk that Vanguard investors in active funds are willing to take. They’re not stupid, investors at Vanguard know that passive is their primary focus. Also the fees for their active funds are lower than average so they have a higher likelihood of success since a lot of the drag on active performance is… high fees.

Re: Jack Bogle would hate what Vanguard has become

#19

Post by ta9000 »

nly wrote: post #16

I hate the way Vanguard UK customers subsidize the US business (Fees are lower for US customers than UK ones on comparable funds) They aren't the cheapest anymore in almost every category, but their brand recognition has exploded here in recent years.

Do you have any evidence that they’re subsidizing US customers? It’s possible the fees are higher in the UK due to it being more expensive to operate the funds.

Re: Jack Bogle would hate what Vanguard has become

#20

Post by nly »

ta9000 wrote: post #19
nly wrote: post #16

I hate the way Vanguard UK customers subsidize the US business (Fees are lower for US customers than UK ones on comparable funds) They aren't the cheapest anymore in almost every category, but their brand recognition has exploded here in recent years.

Do you have any evidence that they’re subsidizing US customers? It’s possible the fees are higher in the UK due to it being more expensive to operate the funds.

Most of their funds are incorporated in Ireland (the UK doesn't have native ETFs, they're all European but can be listed on the LSE)

Investors in the UK are not partners in Vanguards mutual structure, and Vanguards UK platform ("Vanguard Investor") is not run by Vanguard but by a third party (FNZ, a New Zealand fintech).

OCF for VT, a global equity index ETF in the US, is 0.06%

UK equivalent (the Global All Cap Index Fund, or perhaps the VWRP All World ETF) is 0.23% and 0.19% respectively, and the latter excludes small caps and both have fewer holdings than VT

Invesco's All World ETF in the UK, tracking the same index is 0.15% and HSBC have an index fund tracking the same index also at 0.13%

Vanguard UK have a 0.15% platform fee whereas the best UK alternatives are completely free.

Vanguard UK recently introduced a minimum nominal platform fee on top which screwed over small investors.

Vanguard are no longer cheap and not on our side.

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