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. 

Summary

• Moneyfarm offers tailored managed portfolios, while Vanguard is ideal for DIY investors
• Moneyfarm is ideal if you’re looking for hands-off automation services
• Both can be good options depending on investment preferences

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 are how the fees stack up: 

Vanguard fees 

•  0.15% account fee (capped at £375 annually for accounts of over £250,000).  
• No dealing fees on Vanguard funds.  
• £7.50 per ETF trade and one-off costs of between 0.02% and 0.46%.  
• Ongoing costs of between 0.06% and 0.8%.  

• Fund transaction costs of between 0.01% and 0.86%. 

The account fee is capped at £375 for accounts over £250,000. So, most investors pay just 0.15%. 

Moneyfarm fees 

•  Your first £10,000 is managed for free (robo advisor service). 
• For actively managed portfolios, a 0.7% annual fee applies on up to £10,000, 0.7% for £10,000-£20,000, 0.65% for £20,000-£50,000 and 0.6% on investments between £50,000 and £100,000. The fees are lower for bigger portfolios.  
•  Ongoing fund fees vary for exchange-traded funds (ETFs) and range from 0.5% to over1% for managed funds. 

Vanguard is cheaper overall, especially for larger portfolios worth over £100,000. Moneyfarm becomes more competitive for smaller portfolios.

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. 
• 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 and third-party pension integrations. 
• 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 most 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. 

New investors may benefit from Moneyfarm’s support, while those with investment experience may prefer Vanguard’s DIY approach. 

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. 
• Offering education and insights for DIY investors. 
• Strategic, disciplined and a long-term investment approach. 

Moneyfarm’s philosophy: 

• Offering personalised portfolios using ETFs. 
• Active allocation should beat stock markets. 
• Offering access to easy automated investing. 
• Appeals to new investors overwhelmed by choice. 

In summary, Vanguard favours educating DIY passive investors, while Moneyfarm aims to simplify investing for everyone. 

So, Vanguard targets engaged investors wanting more investment control, while Moneyfarm helps novice 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. 

Want help with your investments?

Whether you’re starting your investment journey or want to optimise your portfolio, Unbiased can quickly connect you to a financial adviser regulated by the Financial Conduct Authority (FCA).

Similar articles: Vanguard vs Hargreaves Lansdown | Wealthify vs Moneyfarm | Moneybox vs Moneyfarm