Vanguard Brokerage clients now benefit from commission-free online trading on stocks and options
VALLEY FORGE, PA (January 2, 2020)—Vanguard, a leader in low-cost investing, today extended commission-free online trading for stocks and options to all Vanguard Brokerage clients, effective immediately.1 This expands Vanguard Brokerage’s commission-free platform that has included all Vanguard mutual funds since 1977, all Vanguard ETFs since 2010, and nearly every ETF in the industry since 2018. Additionally, more than 3,000 non-Vanguard mutual funds have no transaction fee when traded online.
“Lowering the cost of investing is business as usual for Vanguard,” said Karin Risi, Managing Director of Vanguard’s Retail Investor Group. “For 45 years, we’ve been dedicated to lowering the cost of index and active funds, ETFs, advice, and brokerage services to help investors achieve better outcomes. The expansion of our commission-free platform marks the latest demonstration of this unwavering commitment to our clients.”
The broadened commission-free platform will benefit Vanguard Brokerage’s clients via lower costs for stock purchases and other strategies, including rebalancing, dollar-cost averaging,2 and tax-loss harvesting.3 In addition to continuing to lower the cost of investing, Vanguard has brokerage enhancements planned for 2020, including a new trade path, an updated online experience, and a redesigned mobile app.
While the elimination of commissions will play a meaningful role in reducing the cost of investing, Vanguard encourages investors to look beyond commissions and consider the all-in cost of their brokerage relationships, including fees, expenses, and opportunity costs. Vanguard Brokerage accounts have zero minimums and zero account fees for clients who establish electronic delivery of statements and other materials. Vanguard Brokerage also features a simple, straightforward fee schedule, including $1 per $1,000 face amount bond trades and $1 per options contract.
Vanguard has also long encouraged investors to be mindful of what they earn on their cash sweep account. The firm offers a low-expense money market fund (Vanguard Federal Money Market Fund,4 which has a current 1.55% yield and a 0.11% expense ratio5) as the default brokerage sweep option, which is considerably higher-yielding than a bank sweep account. Moreover, Vanguard Brokerage does not accept payment for client stock trading and ETF orders. Instead, the firm focuses on receiving the best possible price for its clients’ trades. In 2019, more than 95% of its clients’ marketable orders for Vanguard ETFs were executed with no spread cost.6
“The continued reduction and elimination of fees across the investment industry is a positive development for investors and one that Vanguard has long championed,” said Ms. Risi. “However, as we move to an environment in which ‘zeros’ dominate the headlines and explicit fees become implicit, we encourage investors to look more deeply at the total cost picture. Vanguard remains a vocal proponent of clear and transparent fee disclosure.”
Vanguard’s structure—the company is owned by its funds, which are owned by their shareholders—makes it the only firm truly built for investors. By removing outside owners and outside interests, there are no competing loyalties. Vanguard is managed for the sole benefit of its clients, uniquely positioning it to continually and consistently deliver cost savings. Recent examples include:
- Vanguard has created more than $750 million in estimated cumulative savings for its clients over the last four years resulting from expense ratio reductions of funds and ETFs.7 Vanguard’s asset-weighted average expense ratio is 0.11% for mutual funds and 0.07% for ETFs, as of the end of 2018.
- Vanguard reported expense ratio reductions for 60 ETFs and mutual fund shares representing $69.3 million in client savings for the 2019 fiscal year.
- In November 2018, Vanguard lowered the minimum investment requirements for Admiral Shares from $10,000 to $3,000 for 38 index funds, delivering an estimated $78 million in aggregate savings for investors in 2020, the first full year realization of client savings.8
- Vanguard’s industry-leading advice model,9 Personal Advisor Services, combines sophisticated technology and a proprietary capital markets model with the behavioral coaching capabilities of a human advisor, all for an advisory fee of 0.30%.
Vanguard Brokerage was introduced in 1983 by Vanguard Founder John C. Bogle to enable clients to complement their mutual fund holdings with stocks and bonds. Vanguard’s brokerage experience is designed for investors philosophically aligned with the firm’s long-term approach to investing.
Vanguard is one of the world’s largest investment management companies. As of November 30, 2019, Vanguard managed $6 trillion in global assets. The firm, headquartered in Valley Forge, Pennsylvania, offers 423 funds to its more than 30 million investors worldwide. For more information, visit vanguard.com.
1 Initial investment and trade minimums, management fees and expenses, and other fees may apply. See the Vanguard Brokerage Services commission and fee schedules for full details.
2 Dollar-cost averaging does not guarantee that your investments will make a profit, nor does it protect you against losses when stock or bond prices are falling.
3 Tax-loss harvesting involves certain risks, including, among others, the risk that the new investment could have higher costs than the original investment and could introduce portfolio tracking error into your accounts. There may also be unintended tax implications. We recommend that you carefully review the terms of the consent and consult a tax advisor before taking action.
4 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.
5 7-day SEC yield as of December 27, 2019: 1.55%
6 From January 2019 through October 2019, more than 95% of marketable orders for Vanguard ETFs up to 2,000 shares were executed at the midpoint of the spread or better (i.e., with no spread cost).
7 Based on expense ratio reductions reported on more than 500 mutual fund and ETF shares, based on total assets. Cumulative figure for all share classes from the 2015-16 fiscal year through the 2018-19 fiscal year for the U.S. domiciled funds. Estimated savings is the difference between prior and current expense ratios multiplied by average AUM. Average AUM is based on daily average assets during a month, which are then averaged over the 12-months of the fiscal year.
8 Estimated savings for the identified funds is the difference between prior and current expense ratios multiplied by eligible average AUM.
9 Vanguard Personal Advisor Services manages $148 billion, as of September 30, 2019.
For more information about Vanguard funds or Vanguard ETFs, visit vanguard.com or call 800-662-7447 to obtain a prospectus or, if available, a summary prospectus. Investment objectives, risks, charges, expenses, and other important information 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 the possible loss of the money you invest. Diversification does not ensure a profit or protect against a loss.
Options are a leveraged investment and are not suitable for every investor. Options involve risk, including the possibility that you could lose more money than you invest. Prior to buying or selling options, you must receive a copy of Characteristics and Risks of Standardized Options issued by OCC. A copy of this booklet is available at theocc.com. It may also be obtained from your broker, any exchange on which options are traded, or by contacting OCC at 125 S. Franklin Street, Suite 1200, Chicago, IL 60606 (888-678-4667 or 888-OPTIONS). The booklet contains information on options issued by OCC. It is intended for educational purposes. No statement in the booklet should be construed as a recommendation to buy or sell a security or to provide investment advice. Call The Options Industry Council (OIC) Helpline at 888-OPTIONS or visit optionseducation.org for more information. The OIC can provide you with balanced options education and tools to assist you with your options questions and trading
Vanguard funds not held in a brokerage account are held by The Vanguard Group, Inc., and are not protected by SIPC. Brokerage assets are held by Vanguard Brokerage Services, a division of Vanguard Marketing Corporation, member FINRA and SIPC.
Advice services are provided by Vanguard Advisers, Inc., a registered investment advisor, or by Vanguard National Trust Company, a federally chartered, limited-purpose trust company.
Vanguard Marketing Corporation, Distributor of the Vanguard Funds.