Vanguard vs Moneyfarm: what’s the difference?

Vanguard and Moneyfarm are two big names in investing, but they offer quite different services. 

This guide examines how Vanguard and Moneyfarm compare in terms of fees, investment options and philosophy.

What is the difference between Vanguard and Moneyfarm?

The core difference between Vanguard and Moneyfarm lies in their service models: 

• Vanguard is a low-cost investment platform where you choose and manage your own investments.

• Moneyfarm is a digital wealth manager that creates and automatically manages portfolios for you. 

So, Vanguard offers a DIY investing approach, while Moneyfarm takes care of investments on your behalf. 

Vanguard vs Moneyfarm: how do the fees compare? 

Costs are a key factor in comparing investment platforms.

Here is how the fees stack up: 

Vanguard fees 

• £4 a month for balances under £32,000 and 0.15% account fee for balances £32,000 and over, capped at £375 a year.

• No dealing fees on Vanguard funds.

• £7.50 per exchange-traded fund (ETF) trade using the quote and deal service and one-off trading costs of between 0.01% and 0.26%.

• Ongoing fund management costs of between 0.06% and 0.79%.

Moneyfarm fees 

• Your fees depend on your investment style.

• For actively managed portfolios, there is a platform fee of 0.25% and additional management fees which vary depending on the size of your portfolio - 0.45% fee applies for balances up to £50,000, 0.2% for balances between £50,000 to £100,000, 0.1% for balances between £100,000 and £1.5 million, and no fees for balances above £1.5 million.

• For a fixed allocation portfolio, the fees are cheaper - a platform fee of 0.25% and additional management fees of 0.15% for all sizes of portfolios.

• You’ll also pay ongoing fund fees of around 0.16% per year.

Vanguard is much cheaper overall, especially for larger portfolios worth over £100,000.

However, Moneyfarm manages your money on your behalf and also offers automated advice to help you make decisions.

Is Vanguard or Moneyfarm better?

Beyond the fees, other factors to consider include: 

• Investment choice: Vanguard has a broader selection of investments, while Moneyfarm’s portfolios are constructed from 80 approved ETFs. Moneyfarm offers a curated list of investments alongside robo advice. You can either select from these options yourself or opt for Moneyfarm to manage and choose your investments, taking into account your goals and risk tolerance. Moneyfarm will also automatically rebalance your portfolio on an ongoing basis

• Management: Moneyfarm handles everything for you. Vanguard is execution-only, so you need to pick the funds yourself.

• Account types: Vanguard offers individual savings accounts (ISAs), a general investment account (GIA) and a self-invested personal pension (SIPP). Moneyfarm provides access to ISAs, a GIA, SIPPs and third-party pension integrations, so you can see all your pension savings in one place.

• Technology: Moneyfarm’s platform aims to provide a smoother user experience.

• Brand: Vanguard has a legacy as an indexing pioneer, while Moneyfarm is still building brand recognition in the UK market. 

Overall, there is no definitively better option as it depends on whether DIY or managed investing suits your needs and preferences. 

Which should you choose? 

Consider the following factors to decide which platform will best meet your needs.

If you want: 

• Low-cost index investing: Vanguard

• Actively managed portfolios: Moneyfarm 

• Hands-on investing: Vanguard

• Automated investing: Moneyfarm

• Full investment flexibility: Vanguard

• A hassle-free experience: Moneyfarm 

Both platforms can be great options depending on your investment approach. 

Those who want to make investing decisions themselves may prefer Vanguard’s DIY approach.

Whereas those who want support in making investment choices and managing their investing risk may prefer Moneyfarm.

Can you open accounts with both? 

Yes, you can absolutely hold accounts with both Vanguard and Moneyfarm.

The various benefits could include: 

• Using Moneyfarm for a long-term hands-off strategy.

• Using Vanguard for shorter-term tactical investments.

• Blending both DIY and active management investment styles.

• Comparing the investment performance between both platforms.

• Accessing diversification across multiple providers. 

The big downsides to consider are increased admin and additional account fees. 

But holding both can work well as part of a diversified multi-platform investment strategy. 

Which is better for long-term, passive investing? 

For a passive long-term buy-and-hold investment strategy, Vanguard has an advantage. Their rock-bottom fees compound over years, while Moneyfarm's variable fees slowly eat away at your returns. 

Vanguard offers a huge scope for building a globally diversified passive portfolio at minimal cost. So, their model aligns perfectly with passive investors. 

That said, Moneyfarm’s managed portfolios are also long-term oriented and use ETFs. Their fees are still competitive for smaller investors who want hands-off management. 

So, both can still be decent options for passive, long-term investors, depending on your preferences and portfolio size. 

How do their investment philosophies differ? 

Vanguard’s philosophy: 

• Index funds should beat active funds long-term.

• To keep costs and fees ultra-low.

• Offers education and insights for DIY investors.

• Strategic, disciplined and a long-term investment approach. 

Moneyfarm’s philosophy: 

• Offers personalised portfolios using ETFs.

• Active allocation can help manage stock market volatility and investment risk.

• Offers access to easy automated investing.

• Appeals to new investors who are overwhelmed by choice.

In summary, Vanguard offers low-cost investing for DIY passive investors, while Moneyfarm aims to simplify investing for everyone, helping investors manage their investments. 

So, Vanguard targets engaged investors who want more investment control, while Moneyfarm helps investors via automation.

Which approach resonates more depends on your confidence and interest in managing your investments. 

Weigh up what you value most, whether it’s low fees, flexibility and control or automated guidance and management. 

Your investing style should determine whether Vanguard or Moneyfarm is a better fit. 

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