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Best Vanguard Funds UK 2021

Vanguard is a major provider of investment funds and ETFs. In this guide, we explore the best Vanguard funds to consider in 2021.
Author: Kane Pepi

Last Updated: March 17, 2021

If you’re a newbie investor that wishes to access the financial markets, you might be best suited for a Vanguard fund. Put simply, by injecting money into your chosen fund, Vanguard will buy and sell assets on your behalf. This allows you to enjoy a passive flow of income without needing to have an ounce of investment knowledge.

In this guide, we explore the best Vanguard funds of 2021. Not only do we cover a variety of fund types – such as those based around indexes, bonds, and retirement-focused strategies, but we also walk you through the process of making an investment from the comfort of your home.

Table of Contents

Contents [show]

    Top Vanguard Funds in the UK

    Don’t have time to read our guide in full? Below you will find an overview of the best index funds of 2021.

    1. FTSE 100 UCITS ETF – Best Vanguard Fund for UK Stocks
    2. SPDR S&P 500 Index – Best Vanguard Fund for US Stocks
    3. FTSE All-World UCITS ETF – Best Vanguard Fund for Global Diversification
    4. LifeStrategy 20% Equity Fund – Best Low-Risk Vanguard Lifestrategy Fund
    5. LifeStrategy 80% Equity Fund – Best Equity-Focused Vanguard Lifestrategy Fund
    6. Global Short-Term Bond Index Fund – Best Vanguard Bond Fund for Low-Risk
    7. U.K. Long Duration Gilt Index Fund – Best Bond Fund for Targeting Higher Returns
    8. Global Balanced Fund – Best Vanguard Mutual Fund for Global Stocks
    9. Sterling Short-Term Money Market Fund – Best Mutual Fund for Stability

    2021’s Best Vanguard Funds UK Reviewed

    If you’re based in the UK and you wish to invest in a Vanguard fund – you’ll be pleased to know that the provider offers dozens of options. This covers funds that focus on stocks, bonds, indexes, and more. However, each fund will have its own risks and rewards that need to be considered.

    For example, some UK Vanguard funds will invest in super low-risk instruments like government bonds and high-grade stocks. At the other end of the spectrum, there are funds that invest in higher-risk corporate bonds or stocks from the emerging markets.

    With this in mind, below we outline a selection of the best Vanguard funds that will appeal to a variety of different investor types.

    Best Vanguard Index Funds

    Index funds are ideal if you are looking to invest in the wider stock markets. For example, if you wish to invest in the growth of large UK companies, you would be best suited for a Vanguard fund that tracks the FTSE 100.

    As we uncover below, there are also Vanguard index funds that track stocks from a variety of UK and international exchanges. Once again, the fund you opt for is all down to your personal investing goals.

    S&P 500 Index – Best Vanguard Fund for US Stocks

    The S&P 500 is the most sought-after stock market index globally. It is tasked with tracking the value of 500 large-cap companies listed in the US. This covers both primary exchanges of the NYSE and NASDAQ. Over the course of time, the S&P 500 has made average annualised returns of 10% per year.

    It has gone through many market cycles, meaning that this index is best suited for a long-term investment plan. Much like the previously discussed FTSE 100 index, this particular Vanguard fund is weighted by the size of the respective firm.

    SPDR S&P 500 Index

    For example, the likes of Apple, Microsoft, and Amazon dominate the index – with a contribution of just over 6%, 5%, and 4%, respectively. Facebook, Alphabet (Google), Johnson and Johnson, Berkshire Hathaway, and Visa also play a strong role in the index.

    It is important to note that although you will be investing in non-UK stocks, fees on this particular Vanguard fund are super-competitive. In fact, by using a commission-free FCA broker like eToro, you can invest in this fund without paying a single penny in fees.

    Your capital is at risk.

    FTSE All-World UCITS ETF – Best Vanguard Fund for Global Diversification

    Although this Vanguard fund carries the FTSE name, it is anything but UK-focused. On the contrary, this particular index fund is tasked with tracking the value of over 3,400 companies. This includes firms based in over 50 countries – so this is a great opportunity to diversify across several continents.

    FTSE All-World UCITS ETF

    For example, the fund has just over 59% of its holdings in US and Candian shares, while 17% come from Europe. You’ll also have 12% in Australian and New Zealand companies, and 11% from the emerging markets. In terms of major players, just over 6% of the fund is weighted towards Apple and Microsoft, and 2% to Amazon.

    Smaller companies based in less liquid marketplaces have a much lower weighting – which makes sense for risk management purposes. Once again – and like most of the UK Vanguard funds discussed on this page, you can invest without paying any one-off or annual fees by using eToro.

    Your capital is at risk.

    FTSE 100 UCITS ETF – Best Vanguard Fund for UK Stocks

    As the name suggests, this particular Vanguard fund is tasked with tracking the FTSE 100. This means that you will be investing in 100 of the largest companies listed on the London Stock Exchange. Much like the index itself, this Vanguard fund is weighted.

    This means that the larger the market capitalisation of the respective firm, the higher the percentage that it will contribute to the fund. For example, the likes of AstraZeneca and GlaxoSmithKline each contribute just over 7% and 5% to the fund.

    FTSE 100 UCITS ETF

    This means that were you to invest £10,000 into the Vanguard FTSE 100 UCITS ETF – you would effectively have £700 worth of shares in AstraZeneca and £500 in GlaxoSmithKline. The main concept with this Vanguard fund is that you are investing in the growth of the wider UK economy.

    With that in mind, your returns will be directly correlated to how the London Stock Exchange performs. In other words, if the wider stock markets enter a downward trend, then the value of your investment will follow suit. This is why index funds are best suited for long-term investments, as you will have a better chance of riding out market waves.

    Your capital is at risk.

    Best Vanguard Lifestrategy Funds

    Vanguard UK funds that sit within the ‘lifestyle’ category seek to grow your money over a long period of time. As such, this particular option is best suited for those of you that are looking to invest money over several decades – with the view of building a solid retirement pot for your golden years.

    You do have the freedom of cashing out your investment at any given time though, so you can make use of a Vanguard lifestyle fund however you see fit. Crucially, Vanguard will look to take a balanced approach to invest here, so your portfolio will likely contain a good mixture of equity and bonds.

    LifeStrategy 20% Equity Fund – Best Low-Risk Vanguard Lifestrategy Fund

    If you have a super-low tolerance for risk, then you might be suited for the Vanguard LifeStrategy 20% Equity Fund. As the name implies, this particular fund will allocate 20% of its capital into equities (shares). The remainder will be placed into bonds.

    Regarding its stock holdings, Vanguard will not pick and choose individual companies. On the contrary, it will invest in selected equity funds. For example, 13% of its portfolio is tasked with tracking the FTSE Developed World Index.

    LifeStrategy 20% Equity Fund

    Although this is a higher risk index fund in comparison to the likes of the FTSE 100 or Dow Jones 30 – only a small percentage of capital is allocated. The balance is therefore injected into solid bond funds. For example, 19% is held in the Global Bond Index Fund, and 12% in the UK Government Bond Index Fund. There is also bond exposure in Japan, the US, and Europe.

    If investing in this Vanguard fund directly with the provider, you will pay an ongoing charge of 0.22%. You will need to meet a £500 minimum, too. If this is too much for you, eToro allows you to make an investment from just $50 (about £40).

    Your capital is at risk.

    LifeStrategy 80% Equity Fund – Best Equity-Focused Vanguard Lifestrategy Fund

    At the other end of the spectrum, this particular Vanguard fund has a much larger focus on stocks. While the previous fund allocated just 20%, this option will see 80% of your money put into equities. The balance will be invested in bonds. As such, this Vanguard Lifestrategy fund comes with higher risks.

    LifeStrategy 80% Equity Fund

    In turn, the provider will look to make higher long-term returns. With this in mind, the LifeStrategy 80% Equity Fund might be best suited for younger investors that feel comfortable taking on a higher amount of risk. In terms of its holdings, Vanguard once again avoids selecting individual stocks.

    Instead, the entire portfolio is made up of ETFs. For example, 38% of its basket is made up of the FTSE Developed World Fund and US Equity Index Fund. There is also a 19% holding in the FTSE UK All-Share Index, which seeks to track small-to-medium cap firms. To help balance the risk of investing in high growth equities, the fund also targets the UK, US, and Japanese government bonds.

    Your capital is at risk.

    Best Vanguard Bond Funds

    If you have little to no interest in allocating your investment funds to stocks and shares, then you might be more suited for a Vanguard bond fund. There are many options on the table, with the provider offering bond funds with various risk vs reward ratios.

    For example, there are funds that focus entirely on high-grade government securities, and funds that target higher-risk corporate bonds.

    Global Short-Term Bond Index Fund – Best Vanguard Bond Fund for Low-Risk

    If you’re the type of investor that seeks to keep your risk levels to an absolute minimum, then it goes without saying that your returns will be somewhat conservative. Nevertheless, if this sounds like you then you might want to consider the Global Short-Term Bond Index Fund offered by Vanguard.

    Global Short-Term Bond Index Fund

    With a risk rating of just 2 out of 7, this fund will look to target high-grade bonds. The portfolio actually covers over 3,800 individual instruments, with a good mixture of government and corporate bonds. Of this figure, 42% of the bonds come with a credit rating of AAA, with 15% at AA.

    The common denominator with this fund is that the bonds have a maturity date of between 1 and 5 years. In terms of gains, this Vanguard bond fund grew by 3.52% between September 2018 and August 2019. In its most recent financial year, the fund grew by 2.05%.

    Your capital is at risk.

    U.K. Long Duration Gilt Index Fund – Best Bond Fund for Targeting Higher Returns

    This particular Vanguard fund looks to track the performance of the Bloomberg Barclays Government 15+ Year Fund Index. In simple terms, this means that you will be investing in the future value of gilts. For those unaware, gilts are bond instruments issued by the UK government.

    U.K. Long Duration Gilt Index Fund

    To illustrate how volatile this particular Vanguard fund can be, gains of 18.47% and 3.51% were returned in the 2018 and 2019 financial year, respectively.

    However, in the two years prior, the fund made a loss of 7.24%. Going back a year, this Vanguard fund returned a huge 31.15% in gains. As such, if you are going to invest in this particular fund, you should be prepared for large market swings.

    Your capital is at risk.

    Best Vanguard Retirement Funds

    Vanguard offers a great alternative to a traditional pension plan. That is to say, the provider allows you to inject regular payments into a fund that will target specific equity and bond investments to meet your goals. What we really like about this is that you can select a fund based on your desired retirement age.

    For example, there are funds that have a target end date of 2025, right up to 2065. As such, the fund you opt for will likely depend on your current age.

    Let’s look at an example of how a Vanguard retirement fund works.

    Target Retirement 2065 Fund

    This Vanguard retirement fund is for those of you that are planning to save for your golden years at an early age. You stand to grow your money by a considerable amount when you consider that the fund has a timeframe of over 40 years. In fact, the main idea here is that by reinvesting stock dividends and bond coupon payments as and when they are received, you will benefit from compound interest.

    In simple terms, this means that you will earn ‘interest on your interest’ – so your money can grow a lot faster. So, the Vanguard Target Retirement 2065 Fund will initially have a split of 79% in equities and 21% in bonds. Once again, there are no individual stock allocations made by the provider, as Vanguard focuses exclusively on funds.

    For example, you will have a good split of funds that track leading exchanges in the US, UK, and Europe. There is also an allocation of capital in higher-risk emerging markets. To offset this risk, there are investments in government bond funds. In terms of account minimums, you will need to invest at least £500.

    However, in order to get the most out of a long-term retirement fund like this, you might want to consider setting up a monthly direct debit. You can do this with Vanguard at a minimum of just £100 per month. This could translate into a substantial pot by the time 2065 arrives – especially when you consider the benefits of capital gains and reinvested dividends/coupon payments.

    Your capital is at risk.

    Other Vanguard Retirement Fund Timeframes

    There are several other retirement funds offered by Vanguard – each with a different timeframe target. The key difference with each fund is the initial split between stocks and equity.

    Vanguard Retirement Fund Timeframes

    For example:

    • A 2030 target will have 49% in equities and 50% in bonds. The balance is made up of cash.
    • A 2040 target has a 74% equity, 25% bond, and 1% split.

    Crucially, the allocation between stocks and bonds will be rebalanced as the fund gets closer to its target date. That is to say, long-term targets will initially start with a portfolio that is largely dependent on stocks. Over time, the split will inch closer to bonds.

    Your capital is at risk.

    Best Vanguard Mutual Funds

    Vanguard is also behind a number of mutual funds that target different areas of the financial markets. For those unaware, mutual funds offer a greater level of flexibility for Vanguard. This is because unlike ETFs, they do not need to track a specific market place like-for-like.

    Instead, Vanguard might decide to add a stock to its basket that doesn’t mirror the respective index. For example, a mutual fund tracking the S&P 500 might decide to add Tesla stocks – even though the firm is yet to be added to the index.

    Global Balanced Fund – Best Vanguard Mutual Fund for Global Stocks

    This Vanguard mutual fund is highly diversified. First and foremost, two-thirds of the fund will typically consist of shares, while the balance sits in bonds. As the name suggests, the Vanguard Global Balanced Fund is not tied to a specific marketplace.

    Global Balanced Fund

    Instead, you will have stock and bond investment in dozens of countries. For example, 59% of the fund is held in US-listed assets, while 8.6% is exposed to Japan. There is also 8.4% and 6.2% in the UK and Swiss assets, respectively.

    To illustrate just how diversified this mutual fund is, the largest holding is in Cisco Systems at just 1.94%. After that, the fund has 1.79% in Microsoft and 1.65% in Novartis. In terms of fees, you will pay a slightly higher ongoing charge with this fund at 0.48% annually. This is to be expected though, as the mutual fund is actively managed.

    Sterling Short-Term Money Market Fund – Best Mutual Fund for Stability

    This Vanguard mutual fund comes with a risk rating of just 1 out of 7. Although there is no such thing as a 100% risk-free fund in the investment arena, this is as close as you are going to get. For those unaware, money market mutual funds look to target super high-grade financial instruments.

    This might include government securities like US Treasuries and UK Gilts, cash, fixed-rate bonds, and bank certificates. Either way, the yields on these investments will often sit below the 1%-mark. This will likely fall well short of UK inflation levels, meaning that your money won’t grow.

    Sterling Short-Term Money Market Fund

    However, the overarching purpose of choosing this fund is to protect yourself from volatile or negative market swings. For example, the Vanguard Sterling Short-Term Money Market Fund would have been a sensible option in the midst of the 2008 financial crisis.

    In other words, while the wider stock markets were tanking, this fund would have protected you from further losses. Crucially, when the time is right, investors will look to cash out their holdings in a fund like this and re-allocate the cash into opportunities that offer higher growth potential.

    What Are Vanguard Funds?

    Vanguard logoVanguard is a large-scale financial institution that was first launched in 1975. The provider offers a wide variety of managed investment products – most of which centre on ETF trading and mutual funds.

    By joining millions of UK and international investors, choosing a Vanguard fund will allow you to access the financial markets in a 100% passive manner.

    That is to say, once you make an investment, there is nothing else for you to do. This is because Vanguard will determine which assets to buy and sell, and when.

    Vanguard offers a variety of funds from dozens of global marketplaces. For example, there are funds that target UK stocks, while others will track companies listed overseas. There are also Vanguard UK funds that purchase and sell bonds, both domestically and internationally.

    By investing in a Vanguard fund, you stand the chance of making gains on two fronts. Firstly, it is hoped that the value of the underlying assets will increase – resulting in capital gains. Secondly, most Vanguard funds provide income-earning opportunities. This will either be through stock dividends or bond coupon payments.

    Here’s a quick example of how an investment into a Vanguard fund would work:

    • You invest £5,000 into a Vanguard fund that tracks the FTSE 100
    • At the end of year one, the FTSE 100 has grown by 10%
    • This means that your investment is now worth £5,500
    • In order to realise these gains, you would need to cash out your investment

    With that said, you would also need to factor in dividends.

    • During the same year, your Vanguard fund received the equivalent of 4% in dividend payments
    • On an investment of £5,000  – this works out at £200

    You can elect to have the dividends reinvested into the Vanguard fund – which allow you to grow your money faster.  Or, you can withdraw the dividends out as cash.

    Types of Vanguard Funds UK

    At the time of writing, Vanguard offers just under 80 funds to UK investors. This covers a variety of strategies, target-markets, and risk levels.

    Vanguard funds are generally split into the following four parent categories:

    • Life Strategy: This Vanguard fund-type ios best suited for longer-term investors. In most cases, you’ll want to consider keeping the fund active for at least five years. This will allow you to ride out volatile market waves.
    • Target Retirement: This is a Vanguard fund that is tailored specifically to those of you that want to save your golden years. You get to choose from a variety of target retirement dates – such as 2040 or 2065.
    • Mutual Fund: Vanguard mutual funds will deploy a specific investment strategy. For example, the mutual fund target stocks from a variety of countries, or corporate bonds from the US and UK markets.
    • ETF: Vanguard ETFs will track a specific marketplace. For example, a Dow Jones ETF is will buy shares in all 30 companies that make up the index.

    There are several other factors that you need to look out for when differentiating the best Vanguard funds in the UK.

    This includes:

    • Risk: Vanguard has a risk matrix that runs from 1 (lowest risk) to 7 (highest risk). This risk rating is determined by Vanguard itself and may differ to external market commentators.
    • Allocation Split: Most Vanguard funds have an allocation split between equity and bonds. Portfolios that are largely weighted in the former will target growth, while the latter targets stable returns.
    • Index or Active: You can also choose a Vanguard fund based on how actively managed it is. An index-based fund will simply track an index like the FTSE 100, while an actively managed fund gives Vanguard the flexibility to choose which assets to buy and sell.

    As you can see from the above, there is much to consider when choosing a Vanguard fund, so it’s crucial to spend some thinking about what your long-term investing goals are.

    Benefits of Investing in Vanguard Funds

    There are several benefits of investing in a fund managed by Vanguard.

    This includes:

    Passive Investing

    By investing in a Vanguard fund, you will benefit from an income stream that is 100% passive. As we covered earlier, there is nothing more for you to do once the investment has been made.

    This is in stark contrast to taking a DIY investment strategy, which will require you to personally select which stocks to buy and sell. Not only can this be time-consuming, but also high-risk if you don’t have the skills to do this effectively.

    Leave it to the Experts

    Vanguard is a financial institution with vast resources under its belt. Not only does it have an investment war chest that runs into the trillions of pounds, but it has a team of in-house traders that are proven in this space.

    This means that your money is being managed by people who know what they are doing. They know how to interpret both fundamental and technical data, and are well-versed in deploying risk management strategies.

    Access Difficult to Reach Markets

    As an everyday investor, you will be limited in which financial markets you can access. Sure, you will have no issues finding a UK stock brokers that allows you to buy shares in blue-chip companies listed on the London Stock Exchange, NASDAQ, or NYSE. But, you might find it difficult to invest in firms listed in the emerging markets.

    Vanguard diversified portfolio

    Similarly, UK retail clients have very limited access to corporate bonds space. This is also the case when it comes to buying bonds issued by foreign governments.

    This isn’t an issue that Vanguard will ever encounter. The institution has access to virtually every marketplace on the planet. As a result, investing in a Vanguard fund means that you have the opportunity to access financial markets that would otherwise be difficult to reach.

    Suitable for Small Budgets

    One of the best things about Vanguard is that the provider allows you to invest with small amounts. For example, by investing directly through the Vanguard website, you can get started with a lump sum of just £500. Alternatively, you can opt for a direct debit of just £100 per month.

    With that being said, third-party brokers like eToro allow you to invest in the best Vanguard funds in the UK with an even smaller outlay of capital.

    This stands at just $50, meaning that you only need to part with £40-ish to get a look in. Best of all, the investment platform doesn’t charge ongoing maintenance fees – which is something that all Vanguard funds attract when going direct with the provider.

    Risks of Vanguard Funds

    While there are many benefits of investing in a Vanguard fund, there are several risks and drawbacks that also need to be considered.

    This includes:

    • Risk of Loss: There is no guarantee that you will make money from a Vanguard fund. Sure, your capital is going to be managed by a trusted financial powerhouse. However, many of the funds offered by the provider are tasked with tracking a specific market. For example, by investing in an ETF fund that tracks the FTSE 100, you are at the mercy of the wider UK stock markets.
    • Lack of Flexibility: As noted above, most of the funds offered by Vanguard are tasked with tracking a particular segment of the investment space. This means that you might be missing out on other investment opportunities. For example, by investing in a Vanguard fund that tracks the S&P 500 index, you’ll be missing out on promising companies like Tesla, Zoom, and DocuSign.

    Ultimately – and much like any investment opportunity that you might be considering, you need to have a firm grasp of the risks before proceeding.

    What to Look for When Buying Vanguard Funds UK

    Although we have already covered the different types of UK Vanguard funds available in the market, there are several key metrics that you need to look out for before parting with your money. In doing so, you can be sure that your chosen fund best meets your long-term investing goals.

    In particular, be sure to look out for the following:

    1. What Markets Will you be Targetting?

    You first need to understand where your money is going. For example, how much of your portfolio will be in stocks, and how much in bonds? Furthermore, you need to understand the exact breakdown between each asset class.

    For example, will you be investing in high-grade blue chip stocks found on the NYSE or London Stock Exchange or higher risk firms found on the AIM? Crucially, you need to ensure that the respective portfolio mirrors that of your appetite for risk.

    2. How Much Does the Fund Cost?

    In return for enjoying a passive income stream, you will need to pay Vanguard a fee. This comes in the form of an ‘ongoing charge’. Expressed as a percentage, the amount that you pay is based on the size of your investment.

    How much do Vanguard funds cost?

    For example, if you opt for a Vanguard fund that charges 0.4% and you have £10,000 invested, you will pay £40 per year. As we have previously noted, you can avoid paying an annual charge by using a commission-free broker. In the UK, eToro is a prime example of a broker that allows you to invest in the best Vanguard funds without paying any fees.

    3. How Much Will you Need to Invest?

    If going direct with Vanguard, you will need to meet a £500 minimum investment. You can also elect to set up a direct debit, which will require a minimum monthly investment of £100. Once again, third-party brokers allow you to invest less.

    For example, Hargreaves Lansdown requires an initial lump sum of just £100, while the direct debit option is lowered to £25 per month. eToro doesn’t offer a direct debit option but allows you to invest in Vanguard funds from just $50 (about £40).

    Best Vanguard  Fund Brokers

    So now that we have discussed the best UK Vanguard funds of 2021 –  alongside some handy tips on what to look out for when choosing a fund, we now need to discuss platforms.

    After all, if you want to avoid the annual fee that Vanguard charges, you’ll need to opt for a commission-free online broker. Alternatively, if you’re looking to place more sophisticated trades – such as short-selling Vanguard funds or applying leverage – you’ll need a regulated CFD trading platform.

    With this in mind, below you will find a selection of the best investment apps in the UK or trading platforms that allow you to access the best Vanguard funds.

    1. eToro - World Leading Social Trading Platform with 0% Commission

    We would argue that there is no better place to invest in Vanguard UK funds than FCA regulated eToro. This is because the trusted broker - which is now home to over 12 million investors, allows you to access a variety of Vanguard funds on a commission-free basis. Not only does this include the initial investment itself, but a full alleviation of ongoing charges. As such, eToro provides a completely fee-free way of investing in a Vanguard fund.

    There are many funds to choose from, too. This includes funds that track the FTSE 100 Index, FTSE All-Share Index, S&P 500 Index, and several bond marketplaces. Best of all, you can invest from just $50 into your chosen fund - which is about £40. This lower than the £100 required at Hargreaves, and significantly lower than the £500 needed when investing through the Vanguard website.

    What we also like about the eToro platform is that you will also have access to individual stocks. This covers over 1,7000+ equities from 17 UK and international exchanges. This is great if you want to add specific companies that your portfolio that isn't covered by your chosen fund. Much like its Vanguard fund offering, all stock purchases at eToro are 100% commission-free.

    Additionally, eToro offers a Copy Trading feature. Upon selecting an investor that you want to copy, your portfolio will be mirrored like-for-like. In terms of getting started, you can only an eToro account in minutes via your laptop or mobile phone. Minimum deposits start at $200 (about £160), and you can choose from a UK debit/credit, bank account transfer, and several e-wallets. Finally, your eToro account balance is protected by the FSCS.

    Our Rating

    • Trade assets commission-free
    • Regulated in the UK by FCA
    • Social trading tools
    • User-friendly trading platform
    • 0.5% currency conversion fee on deposits
    75% of retail investor accounts lose money when trading CFDs with this provider.

    2. Plus500 - Low Cost CFD Broker With Tradable Vanguard Funds

    While most investors in the UK will look to access a Vanguard fund as a long-term passive investment stream, some will look to engage in short-term trading. Put simply, platforms like Plus500 allow you to trade Vanguard funds in the form of CFDs. The CFD instrument is tasked with tracking the real-time value of the Vanguard fund in question. In other words, if the Vanguard fund increases in value by 2%, the CFD instrument will follow suit.

    This particular way of accessing a Vanguard fund comes with several benefits that you won't find at a traditional broker. For example, Plus500 gives you the option of placing a buy or sell order. This means that you can trade the value of the Vanguard fund going up or down. This could be beneficial when the wider markets are on a downward swing. Additionally, Plus500 allows you to trade Vanguard fund CFDs with leverage of up to 1:5.

    This means that with a £200 account balance, you could enter a position worth £1,000. We should also note that Plus500 does not charge any trading commissions, and spreads are very competitive. You can get started with a CFD trading account with just £100, and the platform supports debit/credit cards, Paypal, and bank transfers. There are no deposit or withdrawal fees, either. Plus500 is regulated by several bodies, including the FCA.

    Our Rating

    • No withdrawal fees
    • 0% trading commission
    • FCA regulated
    • No educational material
    80.5% of retail investor accounts lose money when trading CFDs with this provider.

    3. Vanguard - Invest in Vanguard Funds Direct With the Provider

    If you don't want to use a third-party broker or CFD trading platform, by all means - you can invest directly with Vanguard. The platform gives you access to all of its funds, albeit, you will need to pay an ongoing charge. The specific fee will depend on which fund you invest in.

    For example, ETF funds that are tasked with tracking a market like the FTSE 100 often cost less than 0.2% per year. If you want to invest in a Vanguard mutual fund, the charge is slightly higher.

    Either way, this still offers great value. Vanguard requires a minimum investment of £500 when you go direct. As we previously noted, you can also elect for a direct debit agreement from £100 per month. In terms of payment methods, Vanguard accepts UK debit cards and bank accounts, but not credit cards.

    Our Rating

    • Invest directly with Vanguard
    • Annual fees are very low
    • Choose from a one-off investment or monthly payments
    • Some Vanguard index funds can be invested in commission-free with a UK broker
    • £500 minimum is on the high side
    There is no guarantee you will make money with this provider.

    4. IG - Invest in a Vanguard Fund or Trade CFDs

    IG is an option worth considering if you are looking to mix investing and trading. Regarding the former, this means that the platform gives you the option of investing in a Vanguard fund in the traditional sense. When using IG for this purpose, you can invest via a Stocks and Shares ISA.

    You can, however, also trade Vanguard funds in the form of CFDs. Much like Plus500, this means that you will have the option of going long or short on your chosen fund. You can also apply leverage of up to 1:5. This is ideal if you want to trade Vanguard funds, but you only have a small amount of capital.

    In the CFD department, IG offers support for MT4. This is great for seasoned traders that want access to advanced chart reading tools and technical indicators. IG also allows you to trade Vanguard funds via a spread betting facility. This means that all of your profits will be exempt from UK capital gains tax.

    In terms of getting started at IG, the broker requires a minimum deposit of £250. You can, however, invest and trade with much lower stakes. You can get money into and out of the platform via a UK debit card or by transferring funds from your bank account. IG is licensed by the FCA and is listed on the London Stock Exchange as a public company.

    Our Rating

    • Spreads from 0.6 pips
    • Supports MT4 trading platform
    • Excellent research department
    • 1% fee when using Visa and 0.5% via MasterCard
    • Spreads on some crypto pairs are somewhat expensive
    There is no guarantee you will make money with this provider.

    5. Hargreaves Lansdown - Huge Libary of Funds

    Hargreaves Lansdown is home to a huge library of funds. This includes ETFs, tracker funds, investment trusts, and mutual funds. Of course, this includes a sizable number of Vanguard funds - all of which you can invest in from just £100. You can also elect to set up a direct debit from just £25.

    Although Hargreaves Lansdown does not charge any initial dealing costs, you will need to pay an ongoing maintenance fee. This amounts to 0.45% on all fund types when you have less than £250,000 invested. In most cases, you might find that this is actually more expensive than going direct with Vanguard.

    However, you will benefit from lower account minimums, alongside a highly extensive research and analysis department. Hargreaves Lansdown is also worth considering if you want to invest in other asset classes. The platform hosts thousands of stocks from the several UK and international marketplaces, as well as a good variety of corporate and government bonds.

    • Trusted name in the UK brokerage scene
    • Heaps of index funds, stocks, ETFs, and more
    • Invest from just £100
    • More expensive than other UK brokers in the space
    Your capital is at risk.

    How to Invest in Vanguard Funds UK

    In this part of our guide on the best Vanguard funds in the UK, we are going to show you how to get started with an investment. By following the walkthrough outlined below, you could have an investment in your chosen Vanguard fund in less than 10 minutes.

    Note: We have opted to show you the step-by-step investment process with eToro. This is because you will have access to heaps of Vanguard funds, you won’t need to pay any commission or ongoing charges, and you can invest from just $50 (about £40). 

    Step 1: Register an Account

    Open an account at eToro by proving some personal information, contact details, and a username and password. You will need to confirm your mobile number by entering the unique code that is sent to your phone.

    eToro sign up

    eToro will ask you to upload some ID. This needs to be a passport/driver’s license and a proof of address. You can skip this step if you don’t plan to deposit more than £1,800-ish. However, you’ll need to upload the documents when you get around to making a withdrawal request.

    Step 2: Deposit Funds

    You will now need to meet a minimum deposit of $200 (about £160).

    Supported deposit methods include:

    • Debit/credit cards
    • Bank transfer
    • Paypal
    • Skrill
    • Neteller

    If you want to invest in a Vanguard fund right now, you are best to use an instant deposit method. This includes all of the payment methods listed above, apart from a bank transfer.

    Step 3: Invest in a Vanguard Fund

    Once you have made a deposit, you can invest in your chosen Vanguard fund at the click of a button. Firstly, search for the specific fund that you wish to invest in. In our example, we are looking to invest in the Vanguard FTSE All-World.

    Invest in Vanguard funds at eToro

    Upon clicking on the result that pops up from the search box, click on the ‘Trade’ button.

    Invest in Vanguard funds at eToro

    Then, it’s just a case of entering how much you wish to invest in your chosen Vanguard fund. Everything at eToro is denominated in US dollars, so enter your chosen investment amount in USD. This needs to be at least $50.

    Invest in Vanguard funds at eToro

    Once you confirm the order, your funds will be allocated into the respective Vanguard fund. You will be entitled to dividends as and when they are distributed. This will be reflected in your eToro cash account. You can exit your investment in your chosen Vanguard at any given time during standard market hours.

    Conclusion

    If you have read our extensive guide from start to finish, you should now have a firm understanding of how Vanguard funds work. On top of discussing the best UK Vanguard funds of 2021, we have also outlined some handy tips on what to look out for before parting with your money.

    If you have selected a Vanguard fund that you like the look of, we would suggest considering eToro to make your purchase. You won’t pay any dealing fees or ongoing charges, and you can invest from just $50. Crucially, it takes less than 10 minutes to open an account, make a deposit, and allocate funds into your chosen Vanguard product!

    eToro: Invest with Vanguard Funds with 0% Commission

    Our Rating

    • Invest in Vanguard funds with no commission
    • Wide range of funds
    • Social trading network
    • Copy other traders
    • FCA regulated broker
    75% of retail investor accounts lose money when trading CFDs with this provider.

    FAQs

    How many funds does Vanguard have?

    If you're based in the UK, Vanguard gives you access to 78 different funds. There are additional funds that the provider is behind, albeit, these are not offered in the UK.

    What is the minimum investment for Vanguard funds?

    If you invest directly through the Vanguard website, you will need to invest at least £500 or sign up to a £100 monthly direct debit. With that said, you only need to invest $50 when using an FCA broker like eToro - which is about £40.

    When do Vanguard funds pay dividends?

    In the vast majority of cases, Vanguard funds distribute dividends once per quarter.

    How much do Vanguard funds cost in the UK?

    Once again, this depends on which provider you use to make the investment. For example, Vanguard itself charges an ongoing fee of between 0.2% and 0.5% - depending on the fund. But, if you use eToro, you won't pay any dealing fees or ongoing charges.

    What do Vanguard funds invest in?

    Vanguard funds will either hold a basket full of stocks, bonds, or a combination of the two.

    Can you trade Vanguard funds?

    Yes, by using a CFD platform like Plus500, you can trade Vanguard funds. This allows you to choose from a long or short position, and even apply leverage of up to 1:5.

    When can you withdraw from a Vanguard fund?

    In most cases, there is no minimum investment period with Vanguard funds. As such, you can cash out your investment at any given time.

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    All trading carries risk. Views expressed are those of the writers only. Past performance is no guarantee of future results. The opinions expressed in this Site do not constitute investment advice and independent financial advice should be sought where appropriate. This website is free for you to use but we may receive commission from the companies we feature on this site.

    Kane holds academic qualifications in the finance and financial investigation fields. With a passion for all-things finance, he currently writes for a number of online publications.

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    eToro: Invest in Vanguard Funds With 0% Commission Now

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