Vanguard fund fees won’t drop from Mifid II decision


Vanguard will not be dropping its fund fees despite its decision to absorb research costs under Mifid II.

The $4.4trn fund manager led its US rivals on making a decision on research costs in August.

But Fund Strategy understands there will be no direct savings for investors.

A Vanguard spokeswoman says they have extensive internal research capabilities across investment markets to support its active and index portfolios, but use external research where they believe it will add value for clients.

“Under Mifid II, research costs are expected to be under $5m. Those research costs will be paid out of the management fees and therefore absorbed in Vanguard’s P&L,” she says.

Chelsea Financial Services managing director Darius McDermott says the industry has been tight lipped about the impact of Mifid II research decisions on fund charges.

“I’m surprised [Vanguard] are not passing on any savings to investors given that they’re a low-cost outfit.”

Blackrock and JPMorgan Asset Management are among other industry giants who confirmed they would absorb costs when the European legislation comes into effect from 3 January.

However, Fidelity Investments announced they would buck the trend and charge investors for research under their shake-up of fees, which was revealed last week. Amundi and Man Group have also said they will pass costs on to investors.

Vanguard’s product range in Europe is dominated by passive products, but last month it announced it was launching its first actively-managed bond fund to the UK.