Vanguard has launched a new fund designed for investors seeking exposure to selected UK companies at a low cost.
The Vanguard Active U.K. Equity Fund Fund will have an ongoing charge rate of 0.45 percent, and is designed to be held by investors for more than five years. The launch follows Vanguard’s fee reductions across its UK domiciled active equity fund range.
The fund will combine the approaches of two external managers focused on identifying growing UK companies, and will be sub-advised by Marathon Asset Management (50 percent) and Baillie Gifford (50 percent). Marathon Asset Management will identify UK companies that benefit investment flows in and out of UK industries, while Baillie Gifford will establish companies with growth potential through in-depth research.
The Vanguard Active UK Equity Fund aims to outperform the FTSE All-Share Index.
Explaining the funds approach, Robyn Laidlaw, head of UK distribution for Vanguard said: “The Vanguard Active U.K. Equity Fund embodies the three elements Vanguard believes are crucial to giving investors the best chance of investment success: top investment talent, with a long-term approach, delivered at a low-cost.”
Ms Laidlaw also emphasised the importance of active management to the company.
She said: “Vanguard is a pioneer in index fund investing, however active management has been a part of our approach since our founding in 1975. Our team provides investors and advisers with high-quality, active and indexed funds at great value.”
Given how unpopular UK equities are to global investors it seems Vanguard has tapped into a niche market of investors who still want to hold decent UK-listed firms but don't want to pay a premium to do so.