Vanguard vs Moneyfarm – Which Works Out Better For Your Money?

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At Generation Money our purpose is to help you make better financial decisions. All of our articles are independently written and/or edited by finance professionals and adhere to strict editorial guidelines. This post may contain links which, if clicked, could result in a payment to the site. These links never impact our editorial policy and all rankings and product recommendations remain unbiased. For more details, read how this site is financed.

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In this review, I’ll be comparing Vanguard vs Moneyfarm, two leading investment platforms in the UK.

I’ll be putting Vanguard and Moneyfarm head-to-head on a number of metrics in this comparison to see which comes out on top. This includes portfolio performance, ethical offerings, products and, of course, fees.

Most people want to get the best possible return on their money for the least cost. As an experienced investor and a Chartered Accountant, I know how important it is to balance costs against returns!

Read on for my full Vanguard vs Moneyfarm comparison, or use the links below to jump straight to a particular section.

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Vanguard vs Moneyfarm: At A Glance

Here’s my overview of Moneyfarm vs Vanguard in case you don’t want to read the whole comparison. 

The table below looks at the key features compared against each other:

VanguardMoneyfarm
Platform / Management Fees0.15% (capped at £375 per year for accounts over £250k)

0.60% for Managed ISA (includes 0.15% platform fee)
Up to £10,000: 0.75%
£10,000 – £19,999: 0.70%
£20,000 – £49,999: 0.65%
£50,000 – £99,999: 0.60%
£100,000 – £249,999: 0.45%
£250,000 – £499,999: 0.40%
Over £500,000: 0.35%

When each tier is reached, you pay that % on the entire balance, e.g. with £80k the entire £80k is charged at 0.60%
Fund Fees0.20% average fund cost0.20% (0.21% on SRI / Ethical portfolios)
Minimum Investment£500 lump sum or £100 per month£500
ProductsStocks & Shares: ISA, JISA

GIA

SIPP (Pension)
Stocks & Shares: ISA, JISA

GIA

SIPP (Pension)
Number Of Ready-Made Portfolios5 Life Strategy
11 Target Retirement
5 Managed ISA portfolios
7
Ethical Funds / Portfolios17 ESG funds7 ethical portfolios
Fixed Allocation PortfoliosN/A5
Individual Funds80+ (including 17 ESG funds)N/A
DIY PortfolioYesNo
Thematic InvestingNoYes
FSCS ProtectionYesYes

Both Vanguard and Moneyfarm are relatively limited in their investment offerings compared to other investment platforms, such as Hargreaves Lansdown. Moneyfarm only offers its own ready-made actively managed portfolios to invest in. Vanguard only offers its own funds to invest in.

Fortunately, Vanguard is one of the largest fund managers in the world, with a choice of 87 passive and actively managed funds. Its platform is a good low-cost way of investing in Vanguard’s funds, so if you’re comfortable picking funds yourself then you’ll prefer Vanguard.

Recently, Vanguard launched a Managed ISA which acts in a similar way to robo-advisors like Moneyfarm. You complete a questionnaire to determine your attitude to risk and Vanguard will then recommend one of its 5 ready made portfolios.

Each portfolio is made up of Vanguard index funds and is monitored monthly by Vanguard experts. Vanguard’s Managed ISA doesn’t have the performance history of Moneyfarm’s for a comparison yet, but it works out cheaper than Moneyfarm if you’re investing under £250k.

By contrast, Moneyfarm does not allow you to invest in individual funds. Instead, you must pick from its range of risk-based portfolios which it has put together, similar to Vanguard’s Managed ISA.

You’ll be asked to complete a questionnaire to assess your attitude to risk, and then Moneyfarm will recommend which of its 7 portfolios is suitable for you. Moneyfarm is the better option if you don’t want to pick your own investments, and don’t mind paying slightly more in costs in doing so. 

In addition, Moneyfarm is better for you if you want exposure to a wider range of funds, as with Vanguard you can only invest in Vanguard’s own funds. Moneyfarms portfolios are made up of ETFs picked by their investment managers for each portfolio. 

Although Moneyfarm doesn’t allow you to customise your portfolio, it does now offer Thematic Investing. This allows you to choose to allocate up to 20% of your portfolio to high-growth sectors. Again, this will suit you if you want to invest in a hands-off way.

Vanguard does offer some guidance to help you pick your own funds outside of its Managed ISA. This is through a simple questionnaire which, upon completion, will suggest how to allocate your investments between shares and bonds based on your answers.

With Vanguard you will also have access to its well-known LifeStrategy and Target Retirement funds, which are actively managed funds. These are a popular set of funds which, combined, have tens of billions of pounds invested in them. So if you want direct access to these funds, you’ll prefer Vanguard.

Overall, Vanguard is better for more experienced investors and those who are confident in picking their own funds. It’s also the clear choice if you want access to Vanguard’s own popular LifeStrategy and Target Retirement funds at relatively low cost.

Moneyfarm is the better option if you want a largely hands-off investment with minimal involvement after completing a risk assessment questionnaire. This comes at a price though, as its fees are higher compared to Vanguard’s Managed ISA if investing up to £250k, and higher for any amount of investment compared to choosing your own Vanguard funds.

What is Moneyfarm?

Moneyfarm is one of the UK’s leading robo-advisors, with over 90,000 users and over £2 billion in assets under management. It launched in Italy in 2011 and then in the UK in 2016. 

It provides ready-made portfolios to invest in based on your attitude to risk. Generally, robo-advisors are a good investment option for you to consider if you don’t pick your own investments.

Moneyfarm was the first robo-advisor I put my money into back in 2017. When I signed up I was placed into the ‘Pioneer’ category, which is risk level 6 out of 7. 

Since late 2017 and up until February 2023 it has returned just under 13% on a money-weighted basis. On a time-weighted basis, it has returned just over 19%. You can read more about the difference between money-weighted and time-weighted returns in my full Moneyfarm review.

What is Vanguard?

Vanguard was founded in the USA in 1975 and is known for creating the first index fund. An index fund is a passive investment vehicle which seeks to track the performance of a major index over time, rather than picking individual companies to invest in.

Index funds are now hugely popular and are often the lowest cost type of fund to invest in. Vanguard now has over 30 million investors worldwide, and offers 87 funds to UK investors to choose from on its platform.

Vanguard vs Moneyfarm: Fees

Let’s look in more detail at costs for Moneyfarm vs Vanguard.

Vanguard has a simple platform fee structure – it charges a 0.15% platform fee on all investments, no matter how much you have invested, and is capped at £375 for investments above £250k.

Moneyfarm has a tiered fee structure based on how much you have invested:

VanguardMoneyfarm
Platform Fees0.15%
Capped at £375 for investments over £250k
No platform fee, management fees below apply
Actively Managed Portfolio Management Fees0.60% Managed ISA fee made up of:
-Management fee: 0.30%
-Platform fee: 0.15% 
-Fund fees: 0.15%
Up to £10,000: 0.75%
£10,000 – £19,999: 0.70%
£20,000 – £49,999: 0.65%
£50,000 – £99,999: 0.60%
£100,000 – £249,999: 0.45%
£250,000 – £499,999: 0.40%
Over £500,000: 0.35%

When each tier is reached, you pay that % on the entire balance, e.g. with £80k the entire £80k is charged at 0.60%
Fixed Allocation Portfolio Management FeesN/A£500 – £100k: 0.45%
£100k – £250k: 0.35%
£250k – £500k: 0.30%
£500k+: 0.25%
Fund Fees0.20% average0.20% + 0.09% market spread
Ethical / Socially Responsible Fund Fees0.11%-0.48%0.21% + 0.09% market spread
Thematic Fund FeesN/A0.40-45%

If you’re happy picking your own investments, then Vanguard is the cheaper option for you. It charges a 0.15% platform fee and has fund costs ranging from 0.06%-0.78% but averaging 0.20%.

For managed investments through Moneyfarm, the cost depends on how much you have invested. The more you invest, the lower the charge, ranging from 0.75% down to 0.35%. With Vanguard’s Managed ISA you will pay 0.60% on your investments. 

So which works out cheaper? Well, Vanguard’s 0.60% charge includes management fees, platform charge and fund costs. Moneyfarm’s management fee must be combined with its average fund fees of 0.20%.

This means that, overall, Vanguard is cheaper for managed investments of up to £250k. Between £250k and £500k Moneyfarm and Vanguard are equal in cost. Above £500k Moneyfarm becomes the cheaper option. 

But if you’re picking your own funds then Vanguard is cheaper than Monyefarm for any amount of investment.

However, InvestEngine is cheaper than both, even for investing in Vanguard funds. InvestEngine is an investment platform that allows you to invest in ETFs without any platform or management fees.

For example, you can invest in Vanguard’s S&P 500 index fund through InvestEngine and pay only the 0.07% fund costs. To do so through Vanguard would incur their 0.15% platform fee on top of the fund costs.

Another benefit of InvestEngine is that it provides a huge range of over 550 ETFs to invest in, including over 40 Vanguard funds. It also has a managed service which will put together a portfolio for you. This is also cheaper than both Moneyfarm and Vanguard’s managed services. 

Vanguard vs Moneyfarm: Products

Vanguard and Moneyfarm both offer stocks and shares ISAs, General Investment Accounts (GIAs), Self-Invested Personal Pensions (SIPPs) and Junior ISAs (JISAs).

In today’s investment market the offering of each provider could be better. Neither offers a Lifetime ISA or a Junior SIPP, for example, which many other investment apps and platforms do.

For example, Hargreaves Lansdown offers a much wider choice of products, including a Lifetime ISA, Junior SIPP and Cash ISA.

Vanguard vs Moneyfarm: Funds & Portfolios

Vanguard offers 5 ready-made portfolios to choose from in its Managed ISA, each with differing risk levels. These portfolios are managed by Vanguard and monitored monthly.

In addition, Vanguard offers 5 LifeStrategy funds which are very popular in the investment management industry, and 11 Target Retirement Funds. You can choose to invest in these as part of creating your own portfolio. Performance histories are available on Vanguard’s website.

By contrast, Moneyfarm’s actively managed investment option has more portfolios to choose from with 7, each also with a different risk level. So while Moneyfarm doesn’t have the individual fund range of Vanguard, it does offer more investment portfolio options.

In addition, Moneyfarm provides Fixed Allocation portfolios which offer lower cost investing. There are 5 options to choose from here, again depending on your risk appetite.

Fixed allocation portfolios are only reviewed and rebalanced once annually, which is why they have lower costs. They may be a good option for you if you simply want low-cost exposure to the market. However, you could instead choose to invest in one or more of Vanguard’s funds instead, which are still cheaper than Monefarm’s fixed allocation portfolios.

Moneyfarm recently introduced Thematic Investing by creating  4 investment ‘themes’ – Technology, Sustainability, Society and Multitrend. The idea of these themes is to get exposure to high-growth industries. Industries in these themes include e-commerce, clean energy and AI.

Thematic options can be added as a proportion of your existing portfolio allocation rather than operating as standalone portfolios. Up to 20% of your overall portfolio can be made up of the 4 themes, and you can choose which themes you want to invest in. These attract a higher fund charge of 0.40%, though, which is on top of management fees.

With Vanguard you can create your own investment portfolio, choosing from over 80 funds. If you’re a more experienced investor you may very well like this option. For many investors, this will also be the cheaper option.

Overall though, Moneyfarm offers a greater choice of ready-made portfolios for you to choose from, but at a higher cost than Vanguard if investing under £250k.

Both Vanguard and Moneyfarm offer ethical/socially responsible investing options. Read on for more on ethical investing.

Vanguard vs Moneyfarm: Ethical Portfolios

Environmental, Social and Governance (ESG) investing or Socially Responsible Investing (SRI) is becoming commonplace in the investment management industry. Investors increasingly want to know which companies and industries their money is going into to ensure that they align with their values. 

Moneyfarm and Vanguard both offer a range of ethical options. Each of Moneyfarm’s 7 ready-made portfolios has an ethical option, each representing different risk levels in the same way its regular portfolios are arranged.

If you choose the ethical option, you can view the details of how and where Moneyfarm invests your money. Typically, these will be in ESG funds. Moneyfarm charges a marginally higher fund fee of 0.21% instead of 0.20% for its ethical portfolios, so there’s no major cost difference.

Although Vanguard doesn’t offer ready-made ethical portfolios, it has 17 of its own ESG funds which you can invest in. Therefore you can create your own portfolio of ESG funds, or customise a ready-made portfolio by substituting or adding ESG funds.

If you’re happy to build your own ESG portfolio, then you’ll prefer Vanguard. Its ESG fund fees range from 0.11%-0.48%.

Overall, Moneyfarm is the better choice for you if you don’t want to pick your own ethical investments. However, if you’re confident in picking your own funds, you will prefer Vanguard.

Vanguard vs Moneyfarm: Performance

Given that Vanguard has over 80 funds, the majority of which are passive index funds, a direct comparison of performance with Moneyfarm is difficult. 

Below shows how Moneyfarm’s lowest risk, medium risk and highest risk portfolios performed in 2022 and 2019, the last year before the covid pandemic:

Moneyfarm Performance20192022
Moneyfarm Portfolio 12.9%-7.5%
Moneyfarm Portfolio 411.7%-7.4%
Moneyfarm Portfolio 719.8%-10.1%

Across the world’s stock markets, 2022 was not a good time for many investors. Energy prices, a cost-of-living crisis and high inflation, particularly in Western economies, caused widespread sell-offs in many major stock markets.

For context, the S&P500 in the US lost 18.5% during 2022 and the pan-European Stoxx 600 lost 12.5%. The UK’s FTSE100 fared slightly better with a 0.9% return for 2022.

Moneyfarm performed better in each of the 3 portfolios above compared to passive index investing in the S&P500 or Stoxx 600 in 2022. However, this is not a scientific analysis and past performance is not a reliable indicator of future performance.

Yet, this highlights one of the advantages of actively managed funds over passive funds. Actively managed funds can be rebalanced during a downturn and thereby minimise losses, whereas passive index funds usually continue to buy the market.

Vanguard’s funds are mostly index tracker funds which would have seen performance in 2022 broadly in-line with the indexes that they track. For example, Vanguard’s S&P 500 tracker fund lost 18.4% in 2022, mirroring the fall seen in the index.

For more on how Moneyfarm’s returns compared to simple index investing, read my Moneyfarm review.

Vanguard vs Moneyfarm: Research, Tools and Advice

As a robo-advisor, Moneyfarm doesn’t have the level of research options and tools that more traditional investment platforms have.

However, Moneyfarm offers some basic tools such as a pensions calculator as well as a range of investing guides and ebooks on its website. You’re also able to see the past performance of its portfolios. 

Similarly, Vanguard mostly offers passive index funds and so it doesn’t offer much at all in the way of research and tools. 

If you would prefer an investment platform with a wider range of tools, you may be interested in Hargreaves Lansdown and Fineco Bank.

With Moneyfarm, you can chat to an investment consultant. This is not regulated financial advice, but a Moneyfarm investment consultant can help you with your investing journey and there’s no cost for this service. 

If you’re a less experienced investor you may like the ability to speak to an investment consultant at Moneyfarm about your options.

Vanguard vs Moneyfarm: Which Has The Better App?

Vanguard does not currently have an app, so you’ll have to accept logging in online through its website to track your investments. 

The Moneyfarm app is great for a simple and straightforward robo-advisor platform. The home screen clearly presents your investment performance, both graphically and with a percentage return. 

Moneyfarm’s in-app chat support feature has always worked well, too. Within the app you can also access Moneyfarm’s regularly updated blog and market news. 

Vanguard vs Moneyfarm: Is My Money Safe?

Both Vanguard and Moneyfarm are regulated by the Financial Conduct Authority (FCA) and have Financial Services Compensation Scheme (FSCS) protection.

This means that if either company were to go bust, your money would be protected up to the value of £85,000 by the regulator. 

It should be noted that some of the funds offered by Vanguard are located outside of the UK and therefore may not necessarily be covered by FSCS protection. You can check this in the Key Investor Information Document that each fund must provide.

Vanguard vs Moneyfarm: Pros & Cons

To summarise my comparison of Vanguard vs Moneyfarm, I’ve outlined below what I believe are the main pros and cons of each investment platform.

Vanguard Pros & Cons

Vanguard Pros

  • Managed investments are cheaper than Moneyfarm when investing up to £250k
  • Low platform fee of 0.15% means that passive index investing is cheaper for any amount of investment vs Moneyfarm’s managed portfolios
  • Over 80 funds to choose from including its popular LifeStrategy and Target Retirement funds
  • Customisable portfolios
  • Index investing has historically outperformed most robo-advisors on a cumulative basis but past performance is not a reliable indicator of future performance

Vanguard Cons

  • On the flip side, it’s more expensive than Moneyfarm if you’re investing over £500,000
  • Has fewer managed portfolios to choose from ( 5 vs Moneyfarm’s 7 portfolios)
  • Investing in Vanguard’s own funds is cheaper with InvestEngine than with Vanguard
  • No mobile app, so you can only access your account through Vanguard’s website
  • No LISA or Junior SIPP

Moneyfarm Pros & Cons

Moneyfarm Pros

  • Lower cost fully-managed investing vs Vanguard if you invest over £500k
  • Allows you to invest in fixed allocation portfolios at a lower cost than actively managed
  • Invest in high-growth sectors through its new Thematic Investing option
  • Intuitive and easy-to-use app
  • Wider range of ready-made portfolios than Vanguard
  • 7 ready-made ethical portfolios to invest in
  • Regular market updates through its website and in the app
  • Outperformed the major US and European indices in 2022, but past performance is not a reliable indicator of future performance

Moneyfarm Cons

  • On the flip side, it’s a more expensive option compared to Vanguard if you have up to £250k to invest (its equal in cost between £250k and £500k)
  • More expensive for any amount of money vs passive index investing with Vanguard
  • Has historically underperformed the S&P 500 on a cumulative basis, but past performance is not a reliable indicator of future performance
  • No LISA or Junior SIPP

Vanguard vs Moneyfarm: The Winner

If it’s a robo-advisor that you want, then Moneyfarm offers a wider choice of ready-made portfolios to choose from. You can simply complete its questionnaire and put your money into its recommended portfolio and leave Moneyfarm to it. 

However, Moneyfarm is the more expensive option if you’re investing under £250k compared to Vanguard’s Managed ISA. 

Vanguard is not only cheaper when investing under £250k in its managed portfolios. If you want to invest in passive index funds then it’s the cheaper option for any amount of investment compared to Moneyfarm’s managed portfolios.

Both offer the same set of products, which is slightly lacking compared to other investment platforms such as Hargreaves Lansdown

Overall though, InvestEngine is the cheaper option for both managed portfolios and passive index investing. It’s actually cheaper to invest in Vanguard’s funds through InvestEngine than it is with Vanguard, as InvestEngine has no platform fee to do so. 

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