VALLEY FORGE, PA (August 21, 2018)—Vanguard, the leader in low-cost investing, today launched the largest suite of commission-free ETFs available to investors.1 As announced in early July, Vanguard is offering commission-free online transactions on approximately 90% of all ETFs—nearly 1,800 of the roughly 2,000 ETFs currently trading on the major exchanges. Vanguard has excluded inverse and leveraged ETFs due to their highly speculative nature.
With a complex-wide average expense ratio of 0.11%, or one-fifth the industry average2, Vanguard has led the industry on lowering the cost and complexity of investing for more than four decades, driving down the costs of funds, advice, and ETFs. Vanguard pioneered index investing in 1976 and eliminated commissions on its funds in 1977. The firm was an early entrant in the ETF market, introducing its first ETF in 2001 and eliminating commissions on its products in 2010. Now, Vanguard Brokerage clients will be able to access the vast majority of ETFs—from providers including BlackRock, Schwab, and SSgA—without incurring additional costs to purchase or sell.
“Vanguard’s expanded commission-free platform offers value, access, and convenience to the increasing number of investors turning to ETFs as their preferred investment vehicle,” said Karin Risi, Managing Director of Vanguard’s Retail Investor Group. “Ownership of Vanguard ETFs has quadrupled in the last five years and ETFs are being held by a broad range of investors—from millennials to retirees.”
In an environment where some financial firms are curtailing access to leading ETFs, Vanguard’s expanded commission-free platform will result in lower costs for initial ETF investments as well as strategies such as dollar-cost averaging, rebalancing, and harvesting losses for tax purposes. While ETFs offer the flexibility to be bought and sold throughout the day, Vanguard strongly cautions investors from trading excessively and chasing hot performers.
“Our goal is to provide additional access and flexibility to our clients, not spur counter-productive, frequent trading activity,” said Ms. Risi. “It is encouraging that our research on trading behavior indicates that our clients are adhering to Vanguard’s investment principles and buying and holding ETFs as part of balanced, long-term portfolios.”
Vanguard Brokerage accounts have zero minimums and zero account fees for investors who establish electronic delivery of statements and other materials. Investors enjoy commission-free transactions on Vanguard’s 77 low-cost ETFs, including some of the industry’s largest funds such as the $101.8 billion Vanguard Total Stock Market ETF (VTI), the $94.8 billion Vanguard 500 ETF (VOO), and the $36.4 billion Vanguard Total Bond Market ETF (BND). Vanguard is the second largest provider of ETFs with $968.1 billion in global assets under management.
Vanguard Brokerage clients also have the opportunity to invest in the more than 2,500 non-Vanguard mutual funds with no transaction fees, and buy individual stocks and bonds, with many investors paying between $0-$2 for online equity transactions.
Settlement accounts are another advantage of a Vanguard Brokerage Account. Unlike its competitors offering lower-yielding sweep accounts, Vanguard’s settlement accounts are allocated to the Vanguard Federal Money Market Fund (VMFXX) 3, which currently yields 1.82%—more than five times the average market rate.4
Vanguard encourages investors to consider the all-in costs of their relationship with an investment provider, including the explicit costs of investing in index and active funds, paying commissions on stocks and ETFs, and receiving advice, as well as the opportunity costs associated with lower-yielding money market accounts and lower after-tax returns.
Improving Investor Experience and Education
Vanguard continues to invest additional resources to enhance its online experience and trading capabilities. Vanguard offers an interactive tool that enables investors to compare ETFs, including pre- and post-tax returns, expense ratios, and other data. Vanguard also offers a five-point checklist of factors to consider beyond cost when evaluating ETFs and other information for investors who want to learn more about ETFs.
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Vanguard is one of the world’s largest investment management companies. As of July 31, 2018, Vanguard managed more than $5.2 trillion in global assets. The firm, headquartered in Valley Forge, Pennsylvania, offers more than 400 funds to its more than 20 million investors worldwide. For more information, visit vanguard.com.
All asset figures are as of July 31, 2018.
For more information about Vanguard funds, visit vanguard.com/fundprospectus or call 800-997-2798 to obtain a prospectus or, if available, a summary prospectus. Investment objectives, risks, charges, expenses, and other important information about a fund are contained in the prospectus; read and consider it carefully before investing.
Vanguard ETF Shares are not redeemable with the issuing Fund other than in very large aggregations worth millions of dollars. Instead, investors must buy and sell Vanguard ETF Shares in the secondary market and hold those shares in a brokerage account. In doing so, the investor may incur brokerage commissions and may pay more than net asset value when buying and receive less than net asset value when selling.
All investing is subject to risk, including possible loss of principal. Diversification does not ensure a profit or protect against a loss.
1 Commission-free trading of Vanguard ETFs applies to trades placed both online and by phone. Commission-free trading of non-Vanguard ETFs excludes leveraged and inverse ETFs and applies only to trades placed online; most clients will pay a commission to buy or sell non-Vanguard ETFs by phone. Commission-free trading of non-Vanguard ETFs also excludes 401(k) participants using the Self-Directed Brokerage Option; see your plan's current commission schedule. Vanguard Brokerage reserves the right to change the non-Vanguard ETFs included in these offers at any time. All ETFs are subject to management fees and expenses; refer to each ETF's prospectus for more information. Account service fees may also apply. All ETF sales are subject to a securities transaction fee. See the Vanguard Brokerage Services commission and fee schedules for full details.
2 Source: Morningstar, as of December 31, 2017.
3 You could lose money by investing in the Fund. Although the Fund seeks to preserve the value of your investment at $1.00 per share, it cannot guarantee it will do so. An investment in the Fund is not insured or guaranteed by the Federal Deposit Insurance Corporation or any other government agency. The Fund’s sponsor has no legal obligation to provide financial support to the Fund, and you should not expect that the sponsor will provide financial support to the Fund at any time.
4 Based on the highest published rates as of June 29, 2018, for settlement accounts at Charles Schwab, E*Trade, Fidelity, and TD Ameritrade, which, with Vanguard, represent the five largest retail direct brokerage providers.
Vanguard Brokerage Services is a division of Vanguard Marketing Corporation, member FINRA and SIPC.
2018 The Vanguard Group, Inc. All rights reserved. Vanguard Marketing Corporation, Distributor