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Reuters/Eddie Keogh
For Vanguard, cash is pouring in.

American low-cost fund giant Vanguard is now pulling in £2 million per day in the UK

By John Detrixhe

Vanguard is a titan in the fund management industry, but the vast majority of its $4 trillion assets are in the US. As its chief investment officer Tim Buckley prepares to become CEO next year, the company is eyeing global expansion. It’s off to a strong start in the UK, taking in almost £2 million ($2.71 million) a day from British customers since it launched there in May.

Vanguard became the second-biggest global asset manager, after BlackRock, thanks to its ultra-low fees. It’s bringing a similar approach to Europe, threatening to spark a price war among asset managers. Vanguard’s direct-to-customer UK service will charge 0.15% per year, which is about a third of the fee at Hargreaves Lansdown, Britain’s biggest provider, according to The Times (paywall). Vanguard’s fees for customers are capped at £375 per year.

The Malvern, Pennsylvania-based company has been one of the biggest winners from the shift to low-cost passive investments, but its European push also features actively managed funds that are prevalent in the region.

Brokerage Liberum has projected that Vanguard will take in £5 billion per year within three years through its online offering, according to the Financial Times (paywall). That would be about 25% of the new money invested by UK retail customers every year.

At least one British institution may welcome Vanguard’s advance into the UK’s £6.9 trillion asset management industry. In June, the UK’s Financial Conduct Authority said the sector suffered from a worrying lack of competition and inflated margins. If its US record is any indication, Vanguard’s arrival in Britain could provide the shakeup the regulator is looking for.

John Detrixhe
Future of Finance Reporter
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