These are two of the largest, best-known global investment brands. Both firms have long legacies of helping people to invest and grow their money. In the UK, they both operate platforms that allow you to buy, hold and sell investments, using trading accounts alongside tax-advantaged savings plans. Plus, they are both asset managers, offering their own in-house managed investment funds. When comparing the two, most investors look to the fee structures and product ranges. Vanguard has lower fees but offers a limited range of Vanguard-branded investment products. Fidelity has higher fees for its platform service but offers much wider investment choice.
Fidelity v Vanguard – overview
What is Fidelity?
Fidelity International is a private employee-owned company that operates its UK investment management services from London and has helped clients to save for retirement and other long-term investing objectives for 50 years. Alongside a fund platform it provides mutual funds and pension management. It’s a big enterprise, with 1.5 million UK customers, and a total of over 2.87 million clients around the world, managing total money worth USD $728.6 billion.
What is Vanguard?
Vanguard is popular with investors who want to keep their investments simple, passive and low cost. Vanguard started in the US in 1975, becoming one of the world’s largest fund groups known for its low-cost passive funds. Vanguard’s US founder John C. Bogle was a pioneer of index funds in the US and a proponent of low-cost investing by individuals. Index funds, also known as passive funds, don’t pick individual shares or bonds to beat the market, they track the performance of the entire market. In 2009 Vanguard’s UK platform opened its UK office and in March 2023 it passed the milestone of 500,000 UK customers, with £16 billion in assets on the platform.
Fidelity v Vanguard – product on offer
With Fidelity you can start investing from £25 but Vanguard requires £100 a month, or a £500 lump sum. They both offer self-invested personal pensions (Sipps), stocks and shares individual savings accounts (ISAs), Junior ISAs and trading accounts. They are regulated by the Financial Conduct Authority and covered by the Financial Services Compensation Scheme (FSCS).
However, Vanguard, by only offering investments in Vanguard funds, is a reduced product offering compared to Fidelity, which offers a wider ranges of funds from different providers.
Vanguard gives investors access to 86 Vanguard funds, including index and active funds, Exchange Traded Funds (ETFs) and the popular LifeStrategy and Target Retirement Fund (TRF) ranges, which are like ready-made portfolios with different risk levels. The Vanguard Funds are low cost, charging 0.20 per cent on average.
Fidelity’s product range on the platform includes its own Fidelity funds alongside funds from other providers – a total choice of more than 3,000 funds. Investors on the Fidelity platform can also select from more than 2,000 UK and overseas shares, corporate and government bonds, exchange traded funds (ETFs) and investment trusts.
Fidelity has negotiated discounts on many funds on its platform. These discounts may be built into the fund’s ongoing charges, so you pay a lower charge than usual. In others, the discount will be a payment that will be reinvested at the end of every quarter into the qualifying funds.
Fidelity fees v Vanguard fees
In addition to the fund fees, they both charge a percentage of the investments that you hold on the platform. Fidelity charges 0.35% of your investments held on the platform, which works out as £350 per year on £100,0000, with no additional charges for holding a Sipp. This ‘service fee’ drops to 0.2% when your money grows to £250,000, with no charge on investments over £1 million, making the maximum fee £2,000. If you have less than £25,000 in total there will be a flat fee of £90 (£7.50 a month) a year. For exchange-traded instruments held in the taxable option of Fidelity’s Investment Account, there is no service fee. There’s also no fee for investments held in a Junior ISA or Junior SIPP.
Fidelity has additional trading charges when you buy and sell shares, ETFs and investment trusts. Vanguard is cheaper, charging a low platform fee of 0.15 per cent per year (£150 on an investment of £100,000), capping this at £375 per year for accounts with investments over £250,000. The Vanguard Managed ISA, which comes with expert investment guidance, costs more, charging a total of 0.60 per cent a year.
Fidelity v Vanguard – research, tools and features
Fidelity offers guidance to help investors narrow down their investment choices. Its recommended list is called the Select 50 and features active and passive funds, investment trusts and exchange-traded funds (ETFs). Fidelity partners with Fundhouse, an independent fund research company, to add independence and enhance the selection process.
Fidelity also has a Navigator tool that assists you in making your own investment choice based on features that are important to you and your appetite for risk, presenting a Fidelity-branded and in-house managed multi-asset fund that correspond with your inputs.
Fidelity customers who want to talk to someone face to face can pop in to its Investor Centre in central London, where it also holds regular education seminars.
Vanguard has a tool to help you choose funds, which starts by asking 6 questions to help it understand your attitude to risk. It has a decent pension calculator to help you find out if you’re on target for the retirement you want. Plus, it offers educational resources to help customers navigate the investment world.
Vanguard also offers a Managed ISA with ‘guidance from real human experts’ for investors who don’t want to make their own decisions.
Fidelity v Vanguard – user experience
Fidelity has a TrustScore from consumer website Trustpilot of 4.1 (based on 4,421 reviews) v Vanguard at 4.0 per cent (based on 2614 reviews). But while Fidelity asks its customers for reviews, Trustpilot states it has no recent records of Vanguard asking their customers to review them. Overall, businesses that regularly invite their customers to write reviews tend to have a higher TrustScore than businesses that don’t. So there’s no clear winner on customer experience.
However, Fidelity’s app has a 4.5 rating on the app store (based on 15,200 ratings). Vanguard doesn’t yet have an app available to UK investors, though says it has one ‘in testing phase’.
Fidelity v Vanguard – quickfire advantages & disadvantages
Fidelity advantages
- Much wider range of investments, including shares
- Discounts on some funds
- Navigator tool to help investors who don’t know how to choose
Fidelity disadvantages
- Higher platform fees
Vanguard advantages
- Low platform fees capped at £375 a year
- Managed ISA option for the less confident
- Tool to help investors choose funds
Vanguard disadvantages
- Only Vanguard-branded investments available
- No app
Our conclusion
If you’re looking to invest in shares and investment trusts, or prefer to hold a range of funds from different providers, then you’d need to choose Fidelity. But if you’re a fan of passive investing, using funds that track performance of stock market indices, Vanguard has the edge for costs. Your best option is to use Compare and Invest to find out what you’d potentially be charged for your type of investing style (products and tax-wrappers held, plus trading frequency).
But don’t just focus on the amount saved over one year as the compounding of relatively small differences in fees and charges over several decades can amount to life-changing sums. On a portfolio of £100,000 in passive investments you would save £200 a year with Vanguard v Fidelity. This might not seem like a big deal but over 25 years of investing, with 6% average annual growth, the effect of compounded charges and lost investment growth could amount to almost £20,000.
