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.

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.

Available ETFs

ETF ASX CodeMangement Fee
VACF0.26%
VAF0.20%
VGB0.20%
VAP0.23%
VHY0.25%
VAS0.10%
VDBA0.27%
VDCO0.27%
VDGR0.27%
VDHG0.27%
VETH0.16%
VEFI0.26%
VESG0.18%
VAE0.40%
VBND0.20%
VBLD0.47%
VMIN0.28%
VGMF0.33%
VVLU0.28%
VIF0.20%
VLC0.20%
VSO0.30%
VGAD0.21%
VGS0.18%
VISM0.32%
VCF0.30%
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.

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.

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.

(For example, the online broker SelfWealth charge a flat fee of $9.95 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.

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 $9.95 per trade).

Money investedVanguard annual feeVanguard annual fee
equivalent in SelfWealth
trades per year
$20,000$404 trades
$50,000$10010 trades
$100,000$20020 trades
$300,000Capped at $60060 trades

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 60 buy/sell trades in one year to make paying an annual fee to Vanguard Personal Investor worthwhile.

Here’s 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)

Fees:

Vanguard Personal Investor account fee$600
Cash trading account fee at 0.20%$2.50
VGAD management cost 0.21%$315
Aust. listed shares $19.95 x 12 trades$239.40
TOTAL FEES$1,156.90

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

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.

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

Cash Hippy

I'm an everyday person on a journey to save money and care for the environment at the same.

2 thoughts on “Vanguard Personal Investor: A Review

  • November 3, 2020 at 8:48 pm
    Permalink

    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
    • November 3, 2020 at 8:51 pm
      Permalink

      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

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