Vanguard defies Chancellor with a £1.85bn CUT to UK stocks held in hugely popular LifeStrategy funds

Vanguard has spurned the Chancellor’s efforts to drive up investment in the UK, and plans instead to slash exposure to homegrown stocks in its popular LifeStrategy funds.

The fund manager is ditching UK equities worth around £1.85billion from the LifeStrategy range to reflect what it dubs the ‘more global focus’ of UK investors.

The firm will also cut the fees on its LifeStrategy range from 0.22 to 0.20 per cent from 27 January. 

The sell-off of UK stocks by a high profile investing platform used by four million investors here is a blow to Rachel Reeves’s strenuous push to make the country a more attractive place to put their money.

She announced new reductions in red tape earlier this week for companies considering whether to list or raise capital in London, saying this heralded a ‘new golden age’ for the City.

The FTSE 100 has hit record highs in 2026 while confidence in the US, the world’s biggest financial market, has been shaken by president Donald Trump’s attacks on the Federal Reserve and threats to take over Greenland.

But Vanguard says it is reducing exposure to UK equities in its LifeStrategy range from 25 per cent to 20 per cent, which it will carry out in stages between March and June.

It is making even more drastic cuts in exposure to UK debt, from 35 per cent to 20 per cent, in the LifeStrategy funds which hold government and corporate bonds and other similar fixed income investments.

Meanwhile, it will launch five new LifeStrategy Global funds, designed for investors who want to be fully invested across global markets, with no extra weight given to the UK. These will also have a 0.20 per cent fee – see below.

Vanguard says: ‘Over time, as UK investors have grown more confident investing internationally, LifeStrategy has evolved to have a more global focus.

‘Today, more investors want a mix that spreads their money across the world, while keeping a meaningful investment in the UK. To reflect this, the LifeStrategy funds’ exposure to global markets is set to increase.’

It went on: ‘We continue to have strong conviction in the UK as an essential part of a diversified portfolio. 

‘On the behalf of our clients, we invest £140billion in UK listed equities and manage around £220billion in UK domiciled funds. That speaks both to our confidence in the UK and to the importance of offering investors the flexibility to invest globally.’

Vanguard had £10.2billion in its LifeStrategy 100% fund at the end of 2025, so a 25 per cent portion in UK stocks would have been worth £2.55billion at that point. Cutting that percentage to 20 per cent would represent a £510million cut to £2.04billion

The Vanguard LifeStrategy 80% fund held £15.1billion in total, so the four fifths of the fund held in stocks would have been worth £12.08billion.

At 25 per cent, the UK exposure would have been worth £3.02billion at the end of last year. Reducing it to 20 per cent would mean a £2.42billion exposure, down £604million from before.

The LifeStrategy 60% fund was worth £16.9billon, with £10.14billion in equities. The plan to cut UK exposure would have seen this reduced by £507million to £2.03billion as things stood at the end of last year.

The LifeStrategy 40% and 20% funds are smaller, holding £5.3billion and £991million respectively at the end of 2025.

Their stock exposure is smaller, but their domestic holdings will also drop as Vanguard is planning a significant cut from 35 per cent to 20 per cent in its UK fixed income assets – mostly government and corporate bonds – in its funds.

This is Money contacted Vanguard about the figures above, and asked how it thought the Chancellor would react to its move away from the UK market when she is trying to persuade investors in the opposite direction.

Vanguard is one of the UK’s most popular investment providers, attracting customers with its relatively low fees and simple no-frills range of tracker funds.

It charges a £4 monthly admin fee to hold investments worth up to £32,000 and 0.15 per cent above that up to a maximum of £375 a year. It introduced the monthly fee for the first time at the start of 2025.

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