Finance

Vanguard’s Europe profit more than doubles as mutual fund fees boom

Profit at the European arm of low-cost US asset manager Vanguard soared by 168% in 2020 as the firm generated bumper fees from its mutual funds and investment platform.

Vanguard Asset Services — which incorporates the Pennsylvania-headquartered company’s businesses in the UK, Ireland, France, the Netherlands, Germany and Switzerland — also added 66 people to its European operations last year, according to accounts filed with Companies House.

Vanguard, which manages $8tn of assets globally, grew revenue at its European business by almost a third last year to £258.1m, up from £195.5m. Its investment platform generated £5.1m in fees in the calendar year, up almost 200%. Meanwhile management fees from its pooled funds increased by almost half to £48.7m.

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Post-tax profit of £26.1m for the year was up significantly from the previous year’s £9.8m, while assets under management in Europe increased by more than a quarter to £51.9m.

Vanguard, which grew its European headcount by 15% to 510 last year, adding people to investment management, operations and client services, marketing and management teams, the accounts show.

Vanguard’s investment platform, which was unveiled in the UK in 2017, is a big hit. The asset manager recently revealed it has attracted 305,000 customers since its launch, with 35% of those aged 30 or under.

Vanguard’s UK platform assets have swelled to £9.5bn, more than double the £4.2bn from September 2020. An additional 100,000 investors joined last year.

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Vanguard, the world’s second largest asset manager, recently told Financial News that it plans to significantly increase the number of active funds it offers to UK investors over the next few years.

While Vanguard remains renowned for its index capabilities — including its status as one of the world’s largest exchange traded funds businesses — it now oversees $1.7tn in active assets globally.

It rolled out its first suite of active funds for UK investors in 2016, having taken the British investment market by storm seven years previously when it debuted a range of low-cost index products.

Neil Cowell, head of UK distribution at Vanguard told FN last month that the asset manager’s active capabilities are “one of the world’s best kept secrets”.

“Right now we are putting together our plans for the next five years. We will be growing our active capabilities and active range,” Cowell said.

To contact the author of this story with feedback or news, email David Ricketts

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