Whether you’re in the market for stocks, ETFs, bonds or otherwise, there’s more choice in UK investment platforms these days than there ever has been. Today we’re going to take a look at how two of the most popular platforms compare: Fidelity vs Vanguard. To find out which option offers the best experience.
In this head to head, I’ll be comparing Vanguard vs Fidelity on a number of different features and factors. If you’ve already been following Project Financially Free for some time, you will already know the drill. Read on and let’s break this down into manageable chunks.
Fidelity vs Vanguard: Quick Overview
- Portfolios: Both Fidelity and Vanguard offer DIY and automated portfolio services.
- Products: You can invest in SIPPs, junior ISAs, general investment accounts and stocks and shares ISAs through both services.
- Advice: Both services offer handy calculators and guides, though vanguard may go a little more in-depth.
- Representative Fees: Fidelity charges 0.35% annual account fee if you have a regular savings plan or £45 flat rate if you don’t on anything less than £7,500, 0.35% on £7,500 to £250,000 and then 0.2% after £250,000. Vanguard charges 0.15% flat rate across the board, capped at £375 per year.
- Minimum Investments: Fidelity lets you start from £50 across most products, while Vanguard gives you the option to start from £100 per month, representative.
- Apps and Programs: Both services have online platforms, apps and telephone services.
What is Fidelity?
Fidelity is a hugely popular investment service that has actually been around longer than most other names in online investing. In fact, it was part of the investment scene long before the internet was even a concept.
Fidelity’s client base is truly enormous, as they currently help more than a million people worldwide to manage their investments. They offer a couple of appealing account options, but dig down deeper and you will find plenty of trading and investment choices beneath the surface.
What is Vanguard?
Vanguard has also been around for a long time – since the 1970s, and is considered one of the biggest fund traders in the world. They’ve only been offering their investing platform to UK users since 2017, however, the Vanguard name is one that many will recognise.
Interestingly, Vanguard’s main appeal – or potentially its achilles heel – lies in the types of funds you can invest in through the platform. However, rather than spoil the surprise, let’s start breaking down these authorised and regulated services to see how they operate in practice.
Fidelity vs Vanguard: Products Available
Let’s take a look at the products you can actually invest in through Fidelity or Vanguard.
Fidelity offers a range of products in the form of Stocks and Shares ISAs, Junior ISAs, Personal Pensions (SIPPs) – including Junior SIPPs, and General Investment Accounts.
The platform also offers a retirement service, where you can entrust the Fidelity team to help manage your money moving into your non-working life.
Fidelity’s Investment ISA requirements will expect you to invest at least £50 per month. This applies to all products here apart from SIPPs, which you can start with from £40. Representative through Vanguard, meanwhile, are minimum monthly contributions of £100 for ISAs and SIPPs or a lump sum of £500 minimum.
Vanguard also offers a similar approach to products. With options available for SIPPs, Stocks and Shares ISAs, Junior ISAs and General Investment Accounts. However, what differentiates Vanguard from Fidelity in this regard is the fact that you will only have access to Vanguards own funds.
This may be either positive or negative in your eyes depending on how you value the funds and whether or not you have set funds you would like to invest in. Vanguard gives you access to 75 of its own funds if you include their LifeStrategy and Target Retirement fund options.
Fidelity’s investment choices are much more flexible. While you can choose to invest in their ‘Select 50’ if you wish, the full scope of funds and individual stocks reaches into the thousands.
Fidelity vs Vanguard: Investment Options
Let’s further consider your investment options through each of the platforms.
Fidelity offers a choice between an active investor (DIY) service, and a more hands off approach where you can passively invest without making any major choices yourself. The hands-on investment approach, through their Investment Fund Finder, gives you free reign and access to thousands of mutual funds, stocks and ETFs, all available for you to filter through and manage on your own. This is likely to be a good option for anyone with more than a little bit of experience.
You might also wish to take a look at the ‘Select 50’ option, which allows you to invest in 50 of the best funds picked by Fidelity’s own experts. This tends to be the midpoint for most people between DIY and managed investing through the platform.
The risk tolerance service at Fidelity is called Pathfinder, and will determine how you respond to risk through a few simple questions. The service then lines up a series of options for you based on your profile, meaning that you can passively invest your money in what the service suggests is best for you from a risk tolerance standpoint.
Vanguard is similarly flexible, offering you the chance to either build your own portfolio from scratch, or to use a ready-made system.
Vanguard’s ready-made service is known as LifeStrategy. This service lets you pick from one of five different LifeStrategy funds (or mix and match them) which is in tune with your risk profile and how much you’d like to invest over a certain period of time. These funds are aligned from lower risk all the way up to higher risk, and have a balance of shares and bonds. You’ll find that the higher risk portfolio will lean heavily towards equities (shares) whereas the lower risk options will contain a large percentage of bonds.
There is, however, a further ready-made system available, known as Target Retirement. Similar to how Fidelity offers a retirement focus option, Vanguards system lets you choose a portfolio built for the year you hope to retire. This clever system manages you investment, automatically readjusting as the years go by to create stability closer to your target retirement.
Fidelity vs Vanguard: Fees
This is where things can get a little complex, but in the battle between Fidelity vs Vanguard, it’s one of the most important factors.
Fidelity charges a 0.35% account fee for the year on anything up to £250,000. Or £45 flat fee on anything less than £7,500 if you dont have a regular savings plan set up. More than £250,000, and you pay 0.20%.
For example, if you were to invest £4,000, you’d pay £14 (or £45 if you didn’t have a regular saving commitment set up). Investing £9,000 would mean you pay £31.50, and investing £300,000 would set you back by £600.
Do bear in mind, too, that Fidelity will ask you to pay £10 in trading fees online for trading in stocks, ETFs or investment trusts. However there are no dealing fees at all for buying or selling funds.
Vanguard, meanwhile, charge a 0.15% fee, annually, across the board – capped at £375. On an investment of £4,000, compared with Fidelity, you’d pay £6. So £8 less per year.
There’s a also a standard trading charge at Vanguard of around £7.50 if you want to buy and sell ETFs at the live price.
Please note, however, that variable ongoing fund charges may also apply with both platforms, depending on the funds you invest in. As an example Vanguard estimate that the average fund charge is around 0.20%. So add in the annual account fee for the platform and you are looking at 0.35% in fees.
Fund management or ongoing fund charges for both platforms are variable depending on what you are investing in so make sure you understand exactly what the fees are before investing.
Fidelity vs Vanguard: Advice & Learning Resources
Part of Fidelity’s long running appeal lies in their wide range of advice on all things investments, meaning that it’s well worth considering their various guides and calculators available.
Vanguard, meanwhile, does go into considerable depth when it comes to analysis and figures, meaning that you can really dive in deep into a world of stats. This might put a few newbie investors off, but ultimately, it is all for the better. There’s a lot of information here.
Fidelity vs Vanguard: Is My Money Safe?
Yes! Let’s keep this simple. Both Fidelity and Vanguard are regulated by the FSCS (Financial Services Compensation Scheme), which means that any investments you place with either service are protected up to £85,000. That, of course, is if anything was to happen to either platform. Which is extremely unlikely.
Fidelity vs Vanguard: Pros and Cons
Let’s break down the finer points of each service.
Fidelity Pros and Cons
- Fidelity offers a huge variety of funds, stocks and ETFs for you to choose from.
- It is a long-running name and is one of the most trusted brands in the field.
- The platform allows you to start funding your portfolios from just £40 per month, making them appealing to many starter investors.
- The platform also offers a bundled fund in the form of Select 50, meaning that you can invest passively if you wish.
- Depending on what you are investing in, it could end up more expensive than Vanguard.
- However if you are looking to invest out with Vanguard funds then Fidelity can provide a wide range of investment options with very reasonable fees.
Vanguard Pros and Cons
- Vanguard, too, is a long-running investment platform with an excellent reputation.
- This service allows you to invest in the same account types as Fidelity, but only through its own exclusive selection of 75 funds.
- There is plenty of managed bundled funds available such as the LifeStrategy and Target Retirement options.
- The ongoing rates at Vanguard generally sit at 0.15% account fee and on average 0.22% fund management charge, very competitive overall.
- However, the lack of stocks or funds from anything but its own collection can let Vanguard down if you want a wider range of options.
Fidelity vs Vanguard: Verdict?
Fidelity vs Vanguard was always going to be a tough battle as these are two well known , long-running names with lots of great options to pick from.
Vanguard may be the best choice if you are looking to invest in a simple, passive, low fee option such as their LifeStrategy or Target Retirement funds. Although Fidelity also offers a passive investment option through it’s Select 50 Fund.
Whether you choose Fidelity or Vanguard may come down to the funds on offer. Both are excellent platforms depending on your requirements. If you are set on particular Vanguard funds then you may want to go with their platform. However if you want a wider range of options to choose from with competitive fees, then Fidelity is likely to be a better choice.