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.
|ETF ASX Code||Mangement Fee|
|VAF, VGB, VBND, VIF, VLC||0.20%|
|VDBA, VDCO, VDGR, VDHG||0.27%|
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.
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 invested||Vanguard ETFs & Managed funds annual account keeping fee Apr 2020 to Aug 2021||Vanguard annual fee|
Equivalent in SelfWealth
trades per year
|Vanguard ETFs & Managed funds annual account keeping fee from 18 August 2021|
|$300,000||Capped at $600||63 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.
|Vanguard Personal Investor Fees||April 2020 – August 2021||From 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|
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.
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.
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