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Vanguard to Ditch Commissions on Most ETFs

Starting in August, roughly 1,800 ETFs offered on Vanguard's brokerage platform will be commission-free

Vanguard today announced that most exchange-traded funds (ETFs) available through its online brokerage platform – investor.vanguard.com – soon will be available without a commission. The change is scheduled to take effect in August, though an exact date has yet to be announced.

Roughly 1,800 of the 2,100 ETFs available on Vanguard’s platform will be commission-free, including ETFs from BlackRock’s (BLK) iShares division, Schwab (SCHW) and State Street’s (STT) State Street Global Advisors, which manages funds under the SPDR brand. Previously, the company offered only its 77 ETFs with no commission.

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Vanguard has long been a price-setting pioneer. Its Vanguard 500 Index Fund (VFINX) set the stage for low-cost investing, and it continues to cut away, reducing expenses on 62 of its share classes in 2017 alone.

The latest move is a result of Vanguard’s desire to continue lowering costs for its clients, says Karin Risi, managing director of Vanguard’s Retail Investor Group.

“Vanguard wants to be the premier provider for long-term investors who want the flexibility to hold a wide array of low-cost funds and ETFs, coupled with the convenience of interacting with a single firm,” Risi says.

There’s no catch, and the ETFs come with no hidden fees. You’ll be able to buy and trade ETFs as frequently as you like without incurring a charge, Risi says.

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As a result, Vanguard will surpass its competitors to become the brokerage with the most commission-free ETFs.

Fidelity currently offers 95 commission-free ETFs, while Schwab offers more than 200 ETFs with no commission. TD Ameritrade (AMTD), meanwhile, offers more than 300 ETFs without a commission.

The roughly 300 ETFs that Vanguard won’t make commission-free are those that are highly speculative and misunderstood, such as inverse and leveraged products.

Vanguard introduced its first ETF in 2001 and will add two more to its lineup in September. Both will be environmental, social and governance (ESG) ETFs.

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