If you have a lump sum to invest and simply want to gain exposure to the whole stock market, Vanguard’s index funds could be the answer. Their funds are simple, well-run, and great value.
For Irish investors with a lump sum of around €25,000 or more, they’re very competitive.
Vanguard have a range of funds designed to replicate major markets, such as the global stock market, the S&P 500 index of top American companies, and bond markets around the world.
Who are Vanguard?
Vanguard were formed in the US in 1975. They are a trailblazer of the investment business. Their founder, John Bogle, based the business on the idea that over time and after costs, most professional fund managers fail to outperform the market index.
So Vanguard provide funds which simply track indices, at very low prices.
What’s on offer to the Irish investor?
In Ireland, it’s possible to invest in Vanguard funds covering all the world’s major stock markets.
There’s a fund with over $6 billion invested, which tracks the US top 500 companies, for example. €100,000 invested in this fund five years ago would be worth over €170,000 at the start of 2019.
There’s a €1.3 billion fund which tracks the Eurozone’s major listed companies, which would have turned €100,000 into over €120,000 over the last five years.
The list goes on. There are funds tracking emerging markets stocks, small-cap stocks, and government and corporate bonds.
What’s the cost?
The all-in annual cost to invest in Vanguard funds is around 1.1%. This includes the 0.5% annual cost of Moneycube’s advice and work to get you invested, access to institutional rates using a fund platform, and the funs management cost. (The exact cost varies a little depending on fund choice). We also charge a one-off set-up fee of 0.5% of the investment amount.
Due to the fixed costs of investing directly in funds in Ireland, we would generally recommend this approach only for portfolios of €25,000 or more.
Tell me more
There’s a whole world of cheap index funds out there.
Vanguard has several worthy competitors, such as Blackrock iShares and State Street, who provide similar funds.
Using these providers it’s possible to mix in index funds tracking specific sectors such as real estate, technology and health sciences, as well as those tracking the world’s major markets.