Vanguard Personal Investor: A Review

During April 2020, Vanguard launched the Vanguard Personal Investor.

It’s a new platform for trading Vanguard managed funds and ETFs, plus Australian shares listed on the ASX.

From 18 August 2021 Vanguard Personal Investor are changing their fee structure. Any changes from August 2021 are in a green font to make it easy for you to compare and contrast.

The eagerly anticipated Vanguard Personal Investor account offers brokerage free trading, however as you read on you will find this account comes with fees that may make you hesitate on signing up.

Another problem is that many traditional functions of a broker are not yet functional to account holders, furthermore Vanguard was unable to give an ETA on when these functions would be available.

Despite misgivings, Vanguard is a reputable company and have $8.8 trillion AUD under their management which includes $1.7 trillion AUD in ETFs alone.

What’s On Offer

The Vanguard Personal Investor account offers access to:

  • Vanguard managed funds with a very low initial investment of $5,000
  • Brokerage free buying and selling of Vanguard Australian listed ETFs from as little as $500
  • The ability to trade in Australian ASX listed shares, minimum of $500 investment, with a fee for brokerage

You no longer need a financial adviser to buy directly with Vanguard, and there are no fees to open or close the Vanguard Personal Investor account.

However, Vanguard Personal Investor is only available on a website browser and does not have a mobile phone app version.

Vanguard has since launched an iOS mobile app, they are yet release an Android version.

Available ETFs

ETF ASX CodeMangement Fee
VACF, VEFI0.26%
VAF, VGB, VBND, VIF, VLC0.20%
VAP0.23%
VHY0.25%
VAS0.10%
VDBA, VDCO, VDGR, VDHG0.27%
VETH0.16%
VESG, VGS0.18%
VAE0.40%
VBLD0.47%
VMIN, VVLU0.28%
VGMF0.33%
VSO, VCF0.30%
VGAD0.21%
VISM0.32%
VGE0.48%
VEQ0.35%

Vanguard Personal Investor Fees

To offset the brokerage free trading of Vanguard ETFs, there is an annual account keeping fee of 0.20%, capped at $600.

From 18 August 2021 the annual account keeping fee of 0.20% will be removed, however for ASX direct shares (non-Vanguard) the fee is reduced from 0.20% to 0.10%. The current media release does not specify if the fee is capped at $600 or not.

This annual fee is charged in quarterly increments and there is an expectation that at all times you will hold a minimum of $500 in your cash trading account to cover fees.

Any cash held in the trading account also accrues a 0.50% interest rate charge.

From 18 August 2021 the trading account interest rate charge will be abolished.

For the buying and selling of non-Vanguard Australian ASX listed shares, there is a $19.95 brokerage fee per trade or 0.15%, whichever is the greatest. This is quite expensive when compared to other Australian brokerage fees.

From 18 August 2021 the brokerage fee is reducing to $9 per buy or sell trade.

(For example, the online broker SelfWealth charge a flat fee of $9.50 per trade regardless of the amount of money invested or sold.)

Other fees to be mindful about are the costs incurred with transferring your current holdings over to Vanguard Personal Investor.

You cannot transfer your pre-existing Vanguard holdings or Australian ASX listed shares into Vanguard Personal Investor. You must sell them using your current broker and then purchase them again within Vanguard Personal Investor. This of course comes at a cost.

You also cannot participate in dividend reinvestment programs. All dividends are paid into your cash trading account, thus unnecessarily complicating investing.

Shares held in Vanguard Personal Investor are not CHESS sponsored.

Fee Examples

Let’s compare the amount of money invested and the Vanguard annual fee divided by the equivalent trades per year (based on SelfWealth’s $9.50 per trade).

The table has been adjusted to reflect the fee changes from 18 August 2021.

The chart below is for Vanguard ETFs and Vanguard managed funds only.

Money investedVanguard ETFs & Managed funds annual account keeping fee Apr 2020 to Aug 2021Vanguard annual fee
Equivalent in SelfWealth
trades per year
Vanguard ETFs & Managed funds annual account keeping fee from 18 August 2021
$20,000$404 trades$0
$50,000$10010 trades$0
$100,000$20021 trades$0
$300,000Capped at $60063 trades$0

From 18 August 2021 there are no account keeping fees on Vanguard ETFs or Vanguard managed funds held in Vanguard Personal Investor. From 18 August 2021 the next four paragraphs are irrelevant.

Assuming most people investing in Vanguard Personal Investor are doing so to buy and hold to increase long term wealth, amounts invested up to $50,000 have a reasonable annual account fee, compared to the equivalent in SelfWealth trades.

It’s once the investment goes above $100,000 that Vanguard Personal Investor no longer appears to be good value for money.

That’s without even in factoring a $19.95 or 0.15% brokerage fee on non-Vanguard Australian shares.

Personally, when I look at a $600 fee for a $300,000 investment, I know I would never need 63 buy/sell trades in one year to make paying an annual fee to Vanguard Personal Investor worthwhile.

Another example of fees based on a scenario over 12 months

  • $500 cash trading account
  • $150,000 VGAD
  • $150,000 Australian listed shares (12 buy trades)

The table below has been adjusted to include changes from 18 August 2021.

Fees:

Vanguard Personal Investor FeesApril 2020 – August 2021From 18 August 2021
Vanguard shares account keeping fee$300$0
Non-Vanguard shares account fee (from 0.20% to 0.10%)$300$150
Cash trading account fee at 0.20%$2.50$0
VGAD management cost 0.21%$315$315
Aust. listed shares $19.95 x 12 trades$239.40$108
TOTAL FEES$1,156.90$573

There are more examples listed in Vanguard’s PDS which is a must read for anyone seriously considering investing with Vanguard Personal Investor.

As you can see from the table above, there is a $583 reduction in fees from 18 August 2021 based on the scenario mentioned.

Conclusion

Whilst Vanguard is a reputable company with low cost management (not account) fees and the majority of our investments are with Vanguard, I do not feel that the Vanguard Personal Investor platform is a good match for our needs.

With the fee changes from 18 August 2021, Vanguard Personal Investor is a much more attractive option for holding Vanguard ETFs and Vanguard managed funds as they will attract zero account keeping fees. Brokerage is now cheaper than SelfWealth for ASX listed shares at $9.00 per trade, but there is still a 0.10% annual account keeping fee for holding those shares in Vanguard Personal Investor.

Even with these changes I still do not feel Vanguard Personal Investor is a good match for our needs due to:

  • having to sell our shares with our current broker and re-purchase them through Vanguard Personal Investor
  • the 0.10% annual account keeping fee for ASX direct shares (non-Vanguard, includes non-AUS domiciled Vanguard shares such as VTS)
  • there is no Android mobile app as yet
  • DRP is not available
  • our shares would not be CHESS sponsored

Disclaimer: I am not a personal finance advisor. Do your own research and contact a professional as needed.

Please scroll down to comments box and share your views about Vanguard Personal Investor.

4 thoughts on “Vanguard Personal Investor: A Review

  • 3 November 2020 at 8:48 pm
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    Great, thanks I’ve been meaning to look into this. Definitely doesn’t seem efficient for buy and hold strategy. Similar to microinvestment accounts … Fine to dip a toe but gets expensive as the years go on and your charged the fees every year

    Reply
    • 3 November 2020 at 8:51 pm
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      Vanguard Personal Investor was also something I wanted to know more about. I definitely agree, it’s not a good match for investors with a buy and hold strategy.

      Reply
  • 26 December 2020 at 4:48 pm
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    Hi cash hippy, thanks for a wonderful rundown on the new vanguard platform. I’ve had a lot of difficulty finding any meaningful reviews of their new offering. I had a number of their wholesale managed funds and was forced to migrate over to their new platform. Thankfully They have confirmed that the 0.2% management fee only applies to new investors. Nevertheless it is a terrible proposition for anyone with more than about $300,000 to invest. The ongoing management fee for managed funds makes no sense when an ETF can be purchased with one off brokerage for $10, going against Bogle’s suggestion that you would be a “nut” to purchase an ETF over a managed fund. More concerning, no HIN is supplied and ownership is indirect through JPMorgan. I don’t know what vanguard are up to, but I will be purchasing ETFs now through Selfwealth although I have never owned a brokerage account!

    Reply
    • 27 December 2020 at 10:17 pm
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      Hi Fat Fire Doc, thanks for the message. Once you get the hang of using a broker, it’s super easy. So easy that I buy shares on my lunch break at work! All the best with your future financial journey.

      Reply

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