- Vanguard announced it extended commission-free online trading for stocks and options to all Vanguard Brokerage clients effective immediately
Vanguard announced it has extended commission-free online trading for stocks and options to all Vanguard Brokerage clients effective immediately. This expands on 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. Plus 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.”
This broadened commission-free platform will benefit Vanguard Brokerage’s clients through lower costs for stock purchases and other strategies, including rebalancing, dollar-cost averaging, and tax-loss harvesting.
Along with continuing to lower the cost of investing, Vanguard has brokerage enhancements planned for 2020 such as a new trade path, an updated online experience, and a redesigned mobile app.
The elimination of commissions will play a meaningful role in reducing the cost of investing so Vanguard is encouraging investors to look beyond commissions and consider the all-in cost of their brokerage relationships, including fees, expenses, and opportunity costs. Plus Vanguard Brokerage accounts have zero minimums and zero account fees for clients who establish electronic delivery of statements and other materials.
The Vanguard Brokerage has a simple fee schedule, including $1 per $1,000 face amount bond trades and $1 per options contract. And Vanguard has also long encouraged investors to be mindful of what they earn on their cash sweep account.
Vanguard offers a low-expense money market fund (Vanguard Federal Money Market Fund, which has a current 1.55% yield and a 0.11% expense ratio) as the default brokerage sweep option — which is considerably higher-yielding than a bank sweep account.
Vanguard Brokerage does not accept payment for client stock trading and ETF orders. And this year, more than 95% of its clients’ marketable orders for Vanguard ETFs were executed with no spread cost.
“The continued reduction and elimination of fees across the investment industry is a positive development for investors and one that Vanguard has long championed,” added 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 is owned by its funds — which are owned by their shareholders. By removing outside owners and outside interests, Vanguard does not have competing loyalties. And Vanguard is managed for the sole benefit of its clients, uniquely positioning it to continually and consistently deliver cost savings.
So far, Vanguard has created over $750 million in estimated cumulative savings for its clients over the last four years resulting from expense ratio reductions of funds and ETFs. And Vanguard’s asset-weighted average expense ratio is 0.11% for mutual funds and 0.07% for ETFs as of the end of 2018.
And 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 thus delivering an estimated $78 million in aggregate savings for investors in 2020, which will be the first full year realization of client savings.
Vanguard’s industry-leading advice model — which is called 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%.
The Vanguard Brokerage was originally introduced in 1983 by Vanguard Founder John C. Bogle to enable clients to complement their mutual fund holdings with stocks and bonds. And Vanguard’s brokerage experience is designed for investors philosophically aligned with the firm’s long-term approach to investing.
Currently, Vanguard is one of the world’s largest investment management companies. And as of November 30, 2019, Vanguard managed $6 trillion in global assets. The firm — which is based in Valley Forge, Pennsylvania — offers 423 funds to its more than 30 million investors worldwide.
