Vanguard expands commission-free platform beyond ETFs
Vanguard, a specialist in low-cost investing, has extended commission-free online trading for stocks and options to all Vanguard Brokerage clients, effective immediately.
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 USD1 per USD1,000 face amount bond trades and USD1 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 per cent yield and a 0.11 per cent 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 per cent 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.”