What caught my eye this week.
Nobody beats Vanguard for low-cost product innovation. However the fund giant isn’t the most proactive when it comes to promotion.
For instance, wouldn’t you agree it’d be worth throwing a measly gazillionth of your turnover in the direction of a UK blog [1] that has championed passive investing for a decade and makes diddly squat from those particular efforts?
If you were, you know, the largest provider of passive index funds in the world? And thus with the most to gain from there being an independent voice making the case for passive investing in a country where until recently almost nobody else did?
In a world where the only fund advertisers that really pay are active managers?
I know, right?
Go figure, as they might say.
Cut and dried case
My grumbling aside, you have to applaud the timing of Vanguard’s latest price cuts.
The implosion of super-slumped fund manager Neil Woodford continues. People like Robin Powell [2] are daily urging journalists to encourage more readers towards index funds.
And now here’s Vanguard with an easy story to write about even lower charges.
To quote CityWire [3]:
Vanguard’s 22-strong index fund line up will now levy an average of 0.15%, with its 13 ETFs on 0.1%.
Combined, the average OCF across its passive funds is now 0.14%, down from 0.19% previously.
The OCF on Vanguard’s UK Gilt ETF has dropped from 0.12% to 0.07%, on its US$ Corporate Bond 1-3 Year Bond ETF from 0.15% to 0.09%, while its FTSE Emerging Markets ETF is now 0.22%, down from 0.25%.
ThisIsMoney [4] says we haven’t entirely got Woodford to thank:
From today, savers in these ‘robot’ funds will pay an average annual management fee of 0.2 per cent of the amount they have saved – and as little as 0.06 per cent.
Many investors in Woodford’s doomed flagship Equity Income fund had been paying 0.75 per cent until his empire collapsed last week.
Vanguard was planning to make its move before the Woodford debacle, in which thousands of investors have been denied access to their money since June while continuing to pay millions of pounds in management fees.
But the American firm, which runs around £100bn in the UK, is hoping the negative publicity surrounding the downfall of Britain’s most feted stockpicker may encourage more savers to switch to cheaper tracker funds.
Have you decided to go fully passive? Get started at our passive investing HQ [5].
From Monevator
10-year retrospective: UK-dedicated passive investors pay the price of home bias – Monevator [6]
From the archive-ator: They don’t tax free time – Monevator [7]
News
Note: Some links are Google search results – in PC/desktop view you can click to read the piece without being a paid subscriber. Try privacy/incognito mode to avoid cookies. Consider subscribing if you read them a lot!1 [8]
Over-50s savers to get new updates and alerts on their retirement pots from next week – ThisIsMoney [9]
Retailers cut 85,000 jobs in the past year – Guardian [10]
A mortgage lenders trade body […] claims buying a home will leave you far better off versus renting, even if house prices never rise – ThisIsMoney [11]
Peer-to-peer lender Funding Secure goes into administration – Guardian [12]
[13][Click to enlarge the megalopoleis]
Products and services
If cash is becoming obsolete, why are citizens in rich countries holding ever more of it? – Yahoo Finance [15]
Start-up Penfold sets up self-employed pensions in five minutes, but looks pricey versus DIY – ThisIsMoney [16]
Ratesetter will pay you £100 [and me a cash bonus] if you invest £1,000 for a year – Ratesetter [17]
Nationwide scraps loyalty accounts held by 1.6m, offers its members 1.5% bonds – ThisIsMoney [18]
Seaside destinations dominate the top 20 most popular places to search for a home – ThisIsMoney [19]
Homes for sale on islands [Gallery] – Guardian [20]
Comment and opinion
Save lots, spend little… how a shop caretaker built an $8m fortune [Search result] – FT [21]
Revisiting the ’87 Crash – Novel Investor [22]
Psychology and the good life – Humble Dollar [23]
Long shot – Indeedably [24]
How to measure your portfolio’s returns [with spreadsheet] – UK Value Investor [25]
Ignore your portfolio to avoid falling for ‘regret aversion’ – Klement on Investing [26]
How much time should you spend on your finances? – A Wealth of Common Sense [27]
The things we do for work – The Simple Dollar [28]
Naughty corner: Active antics
Angel investing in the UK: Some examples of what happened next – Fire V London [29]
Useful biases – Morgan Housel [30]
Looking for great share tips? Join the club [Search result] – FT [31]
Glamour stocks have been on an historic tear, but are they starting to fade? – Yahoo Finance [32]
Value hasn’t done so badly – as long as you’ve not been shorting growth – Bloomberg Newswire [33]
The US yield curve has now ‘uninverted’ – Wisdom Tree [34]
Remember when active share was the key to finding alpha? Forget about it – Alpha Architect [35]
Malinvestment mini-special
WeWork’s implosion shows how SoftBank is breaking the world – Vice [36]
WeWork, Neil Woodford and the modern ‘bezzle’ [Search result] – FT [37]
Howard Marks warns in his latest letter that negative rates are an unknown quantity – Market Folly [38]
Ben Inker of GMO: Good returns have to be paid back sometime [Podcast] – Meb Faber [39]
Brexit
Look, I understand there were some principled sovereignty-based reasons to vote Leave. But does the end (let alone the rubbish economics) justify these means?
We have a prime minister who said he’d never ask for an extension (he has), who said we’d be out by 31 October (we won’t), and who insisted no Conservative prime minister would ever allow a customs border in the Irish Sea (he’s agreed one, turning the hated ‘backstop’ into a feature not a bug).
This isn’t about Project Pangloss versus Project Fear. It’s the leader of our country making promises he knows from day one cannot be achieved, to weaponize your anger that Brexit hasn’t been delivered. He wants you to blame his opponents for doing their job, as he knew they would.
He is playing Leavers like a fiddle.
This stuff has consequences. The fact that more moderate Tory candidates who told the truth didn’t get his job is just the least of them.
British journalists have become part of Johnson’s fake news machine – Open Democracy UK [40]
Most voters think violence is ‘a price to worth paying’ for their Brexit preference… – Guardian [41]
…or do they? – Twitter debunk of same survey [42]
LOL: Production of Brexit 50p coin paused amid exit uncertainty – Guardian [43]
‘According to some reports, Brexit coins minted with the 31 October date “could be worth up to £800”. So could €1 coins, soon enough.’– Marina Hyde [44]
But seriously, Brexit is no laughing matter. No, Brexit is hysterical – Politico [45]
Kindle book bargains
Fooled by Randomness by Nassim Nicholas Taleb – £1.99 on Kindle [46]
Who Moved My Cheese? by Dr Spencer Johnson – £0.99 on Kindle [47]
Grit: The Power of Passion and Perseverance by Angela Duckworth – £0.99 on Kindle [48]
Little Black Book: A Toolkit for Working Women by Otegha Uwagba – £0.99 on Kindle [49]
Off our beat
‘Gladiators … ready!’ Whatever became of Wolf, Jet, Rhino, and the show’s other stars? – Guardian [50]
Waitrose and John Lewis to stop putting plastic toys in Christmas crackers – BBC [51]
The difference between US and UK ingredients are disturbing [Bit old] – Ron Project [52]
‘Respect is given’: Australia closes climb on sacred Uluru – Guardian [53]
Do today’s global protests have anything in common? – BBC [54]
And finally…
“Mr Spock would be a natural trader. That’s because, of course, he has no emotions – and being emotionless is exactly what you need in the markets.”
Robbie Burns, The Naked Trader [55]
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