If you’re a keen investor, it’s likely you’ve come across both Moneyfarm and Vanguard before as investing options in the UK. Thanks to their user-friendly portfolio managers, they’re both immensely popular with modern savers, but which service offers the best value? Can you expect to pay more with Moneyfarm, or will you get a better return on your capital with Vanguard?
Vanguard has the edge over Moneyfarm when it comes to age and experience – but Moneyfarm’s approach to robo advising continues to turn heads. In this match-up, I’ll take you through what you need to know about both platforms, and which might give you the best conversion on your cash.
Moneyfarm vs Vanguard: Quick Overview
If you don’t have time to dip into my full review of Moneyfarm vs Vanguard, here’s a quick breakdown of the important points.
|Investment Options||Managed portfolios||Managed and DIY portfolios|
|Active or Passive?||Passive only||Active & Passive|
|Number of |
|Minimum Investment||£500||£500, or |
£100 per month
|Account Options||Junior ISA, Stocks and Shares ISA, SIPP, General Investment||Junior ISA, Stocks and Shares ISA, SIPP, General Investment|
|Socially Responsible Option?||All funds are socially responsible by default||Yes – ESG funds available|
|Annual Mgmt Fee||0.375% – 0.75% (sliding scale)||0.15% (capped at £375 over £250,000)|
|Notable Features||eBook learning, robo-advisor, risk questionnaire||Retirement-focused portfolios, retirement advisor, monthly top-up|
Moneyfarm is a wealth management service with history in the UK dating back to 2016. Before this time, the brand specialised in investment options in Italy – but it’s now best-known as a provider of managed, passive portfolios.
Moneyfarm has grown massively over the years – it acquired Wealthsimple’s British customers at the end of 2021. What’s more, if you choose to invest your own money with the platform, it’ll be joining an eye-watering £2 billion+ in managed assets.
Vanguard is a name that’s stood the test of time. Heading into its sixth decade of operations, this is a financial brand that thrives on simplicity. Vanguard Investor has been a part of the British investments scene since 2009, and since that time, it’s competed well with emerging robo advisor apps.
Vanguard is similar to Moneyfarm in that its primary focus is user-friendliness – while still offering incredible diversification. That, at least, should make our match-up all the more interesting – so let’s dive in and take a closer look.
Moneyfarm vs Vanguard: Account Options
When looking for an investment account, it’s likely you will want to consider either a pension, an ISA, or a general portfolio. Thankfully, both Moneyfarm and Vanguard satisfy these needs outright.
Moneyfarm Account Types
Moneyfarm supports pensions, general investments, stocks and shares ISA, and junior ISAs. Market-wide, this line-up covers most bases – with only a few investment platforms elsewhere really stretching beyond the ‘big four’.
Notably, Moneyfarm has applied social responsibility to all its account and portfolio options. Unlike some other investment platforms, there’s no need to pick a specific account to invest responsibly.
Vanguard Account Types
Vanguard runs the gamut from junior ISAs, stocks and shares ISAs to personal pensions (SIPPs) and general accounts. That’s on par with Moneyfarm – there isn’t much to decide between the two platforms in this category.
Moneyfarm vs Vanguard: Portfolio Options
In this section, the differences between Moneyfarm and Vanguard tend to grow a little more obvious. The key distinction here is that Moneyfarm only provides a managed portfolio service – whereas you can ‘DIY’ invest or choose a managed portfolio through Vanguard.
Both platforms keep investing simple regardless of the goals you may have in sight. However, Vanguard may edge this leg of the match-up thanks to its wider variety and control potential.
Moneyfarm’s range of portfolios revolves around your attitude to risk. When you first sign up with the platform, you’ll fill in a questionnaire about your investing goals and your attitude regarding money. Moneyfarm’s algorithms will then decide where you fit into one of its seven base profiles – and will start building a managed plan for you.
This is a robo advisor service – in that it’s completely ‘hands-free’. Your Moneyfarm advisor is easy to adjust as you go, however, there’s no need to worry about making big portfolio decisions on your own. This can be a make-or-break feature for many investors – as, if you are comfortable with it, there are certainly some benefits to travelling the DIY route!
Moneyfarm portfolio profiles swing between bonds and stocks, with willing risk-takers likely to receive a package that’s weighted more towards the latter. These portfolios are ready-diversified, meaning you get a fresh, global pick of ETFs and funds recommended by Moneyfarm’s impressive robo experts.
Therefore, arguably, this is a platform that immediately appeals to new investors. Not only can you expect a robo advisor to take care of the tougher portfolio decisions for you, but it’s hands-free from the opening questionnaire onwards.
While Moneyfarm’s portfolios consist of 3rd party underlying funds, they provide two tiers of service built with these funds:
- Fixed Allocation: The fund allocation amongst the various asset classes (stocks, bonds, cash, etc.) is set at the beginning of each year and then remains fixed until the next rebalancing period. This rebalancing is done once per year. This makes it very similar to Nutmeg’s Fixed allocation funds or Vanguard’s Lifestrategy funds. Barring exceptional circumstances, Moneyfarm does not adjust or rebalance over the course of the year.
- Actively Managed: The name is slightly misleading as the underlying funds are still index trackers, however Moneyfarm’s portfolio managers introduce their own secret sauce to actively allocate assets amongst the chosen asset classes. The portfolios are rebalanced more frequently based on their manger’s outlook on current events.
As you may imagine, the fixed allocation approach requires less work on behalf of Moneyfarm’s staff. Consequently, Moneyfarm passes this benefit on to their customers in the form of lower fees.
Investors in search of a little more control may wish to choose a provider with the option of either DIY or fully managed portfolios. Thankfully, Vanguard covers both bases with expertise.
Vanguard’s main passive portfolio options split into two categories. You’ll get to choose from either a LifeStrategy or a Target Retirement portfolio, each designed to cater to specific investment goals.
LifeStrategy is Vanguard’s landmark offering, with five different portfolio templates to choose from at the point of starting out. These vary in equity split, with each swaying between shares and bonds.
Target Retirement portfolios are, again, weighted between shares and bonds. However, their splits are a little broader, and there are 11 different options to choose from! These portfolio templates are designed to help people retire at different ‘year targets’.
For example, the Target Retirement 2045 Fund is designed to provide growth and stability for you to retire in 2045. It has a representative split of 78% shares and 22% bonds.
There are also several themed and niche funds on offer at Vanguard. For example, the Emerging Markets Stock Index Fund aims at those shares showing promising early growth. However, there is zero room for bonds in this portfolio option.
Moneyfarm vs Vanguard: Fees
Both Moneyfarm and Vanguard pride themselves on offering great-value asset management to their customers. However, with Moneyfarm restructuring its pricing as of June 2022, does it hold a candle to Vanguard’s rates?
Providing you invest at least £500, Moneyfarm will offer you a sliding scale of fees that is refreshingly easy to understand.
MoneyFarm has simplified its management pricing structure – which promises to reduce rates slightly for most customers. As with most investment service providers, you will have to be aware that you will be paying for two sets of fees:
- Platform fees: This is what the providers like Moneyfarm, Vanguard, or Hargreaves Lansdown charge for their services
- Fund fees: This is the fee charged by the underlying funds in the portfolios. This fee varies based on the provider of the fund and whether it is actively managed or a passive index tracker or ETF.
There are now seven main tiers of pricing that apply to the entirety of a portfolio, based on asset value within. Here’s a quick breakdown of what you can expect:
- £500 – £9,999: Pay 0.75%
- £10,000 – £19,999: Pay 0.70%
- £20,000 – £49,999: Pay 0.65%
- £50,000 – £99,999: Pay 0.60%
- £100,000 – £249,999: Pay 0.45%
- £250,000 – £499,999: Pay 0.40%
- £500,000+: Pay 0.35%
This pricing structure effectively means you can expect to pay a lower annual rate the more you choose to invest. Therefore, this sliding scale clearly benefits those who have more to save. Moneyfarm has a helpful calculator that can help you accurately determine how much you will pay.
However, do also take into account underlying fund fees (representative 0.2%) and market spread (representative up to 0.09%) on your portfolio. Effectively, these fees all ensure your portfolio remains fully managed, and that you also have access to your own investment consultant.
Fund fees are ‘built’ into the price of running your portfolio, meaning the main cost you will see is the annual rate(s) suggested above.
Moneyfarm offers an even lower pricing tier for accounts if you choose to go with their fixed allocation portfolios. The fees are set up in the following manner:
- £500 – £99,999: 0.45%
- £100,000 – £249,999: 0.35%
- £250,000 – £499,999: 0.30%
- £500k+ : 0.25%
Moneyfarm Fee Examples
Let’s use an example of £50,000 to see how much you’d expect to pay annually for Moneyfarm to manage your portfolio.
From the get-go, this allows for a management cost of 0.60%, which adds £300 to your total. An underlying fund fee of 0.2% (representative) adds £100, with market spread costs of 0.09% (representative) adding a further £45.
Overall, an investment of £50,000 is likely to demand fees of £445. That’s a rate of 0.89%.
That considered, let’s take advantage of Moneyfarm’s high-investment, low-fee benefits. By investing £500,000, you’d pay £3,200 (representative) – but at a rate of 0.64%.
Vanguard differs further from Moneyfarm in terms of fee structuring. However, it’s just as simple to get to grips with, even if the layout varies. Again, you’ll need to invest at least £500, or £100 per month – you choose!
A basic account fee at Vanguard is weighted at 0.15% for any investments up to £250,000. For any accounts with assets worth more than £250,000, you’d only ever pay £375 – this is the ‘upper cap’. By that measure, it, again, may pay to invest more to take advantage of the bigger savings on offer.
Fund management costs, too, will apply. Ongoing charges can vary from 0.22% to 0.24%, and an additional fund transaction fee of up to 0.10% will apply.
If you choose to invest in individual funds alone, costs vary even further. You can expect to pay between 0.06% and 0.78% in ongoing charges, with transaction fees weighted at anywhere between completely free to 0.93%.
In addition, you can expect to pay one-off ETF costs between 0.02% and 0.15% to cover the spread – with another £7.50 applicable per trade if you want to use live pricing.
However, barring the account management fee, these costs are buried into the return you get from your portfolio. Therefore, you’d only ever see 0.15% to pay outright. That said, it’s worth keeping the other charges in mind!
Vanguard Fee Examples
To compare with Moneyfarm, let’s take Vanguard’s managed fees as an example. With an investment of £50,000, you’ll pay £75 in account fees. A representative 0.24% fee for ongoing management will incur £120, while fund transactions will cost £50.
That’s a total of £245 in annual fees on an investment of £50,000 – but what about higher-value portfolios?
You’ll incur £375, capped, if you invest £500,000 with Vanguard. Using representative figures from above, there’s £1,200 to pay in ongoing costs, and £500 in transaction charges. That’s a total of £2,075 to pay.
The bottom line is, you can expect to pay much less with Vanguard than Moneyfarm if you’re investing more than £250,000.
Moneyfarm vs Vanguard: Platform Features
Given that both Moneyfarm and Vanguard trade mainly on being ‘back to basics’ investment platforms, how do they measure up in terms of features?
Moneyfarm, for all its simplicity, is a little thinly spread when it comes to features. There are some eBook resources offered via the mobile app, meaning investors never have to feel they are swimming at the deep end. There’s a handful of calculation resources, but I’d love there to be a little more in terms of fund analytics.
Vanguard’s stripped-back investment service is refreshingly simple, but it can seem a little underwhelming for investors looking for stacks of features. You can access the service via mobile web – but, unlike Moneyfarm, there’s no dedicated app.
However, Vanguard does offer an impressive financial planning advisory service. This, alongside their Target Retirement portfolios, allows investors to discuss their needs in further detail. There’s a 0.79% fee and an investment minimum of £50,000 required.
Vanguard also allows you to top up monthly – great if you’re paying your minimum investment each month. You can also break down your portfolio into impressive detail – though other platforms go a little bit deeper.
Moneyfarm vs Vanguard: Verdict
Both Moneyfarm and Vanguard are fantastic for new traders and investors who want to keep things simple. Both have impressive experience behind them, and what’s more, their products are competitively priced and laid out. In fact, their packages greatly benefit high-value investments!
Crunching the numbers shows that Vanguard is slightly better value than Moneyfarm. It also offers a greater variety of portfolio packages and the option to go ‘DIY’. Moneyfarm, on the other hand, provides an impressive robo advisor service that tunes into your risk profile. It’s also highly preferred by those investors who really want to go ‘hands-free’.
To conclude – both platforms have a lot of value to offer, and certainly lead the way in terms of simplicity and user-friendliness. Why not take a closer look at their options and see how much you could make in the years ahead?