Total Cost of Ownership: What Actually Matters
For passive index fund investors, the total annual cost has two components: the platform fee and the fund's ongoing charge figure (OCF). Minimising both is the primary driver of long-term investment returns for passive investors -- every 0.1% saved compounds significantly over decades.
| Platform | Platform Fee | Example ETF OCF | Total Annual Cost (est.) |
|---|---|---|---|
| InvestEngine (DIY) | 0% | 0.22% (VWRP) | ~0.22% |
| Trading 212 | 0% | 0.22% (VWRP) | ~0.22% |
| Vanguard (own funds) | 0.15% | 0.22% (LifeStrategy) | ~0.37% |
| Freetrade (Standard) | £4.99/mo flat | 0.22% (VWRP) | Flat + OCF |
| Hargreaves Lansdown | 0.45% | 0.22% (fund OCF) | ~0.67%+ |
The Cheapest Options
InvestEngine (DIY) and Trading 212 are the lowest-cost platforms for passive index ETF investing, with zero platform fees. The only cost is the ETF's own ongoing charge. For the most popular global index ETFs such as the Vanguard FTSE All World (VWRP) or iShares Core MSCI World (SWDA), OCFs typically range from 0.07% to 0.22%.
Vanguard's own platform at 0.15% is competitive, particularly for those who want Vanguard's LifeStrategy funds (which are not available as ETFs on InvestEngine or Trading 212 -- only on Vanguard's own platform and HL).
Large Portfolios: The Fee Cap Matters
For investors with larger portfolios, the fee cap changes the calculation. Vanguard caps its platform fee at £375 per year, which means on a £250,000 portfolio the effective rate is 0.15%. Hargreaves Lansdown reduces its fee at higher tiers and also caps at £45/quarter for ETFs held on a Vanguard-basis (for shares and ETFs specifically, not funds). The specific cap structure matters significantly for large portfolio holders.
Verdict for Passive Investors
For most passive index investors, InvestEngine DIY or Trading 212 offer the lowest total cost. For Vanguard LifeStrategy investors specifically, Vanguard's own platform at 0.15% is the only direct route. For large portfolios (£200,000+), the fee cap structures of Hargreaves Lansdown and Vanguard become more relevant and should be modelled specifically for your situation.