Market Overview

Vanguard Offers Commission-Free Trades on Its Family of Low-Cost ETFs

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VALLEY FORGE, Pa.--(BUSINESS WIRE)--

Vanguard, long recognized as a leading provider of low-cost index and actively managed funds, today announced substantial reductions in the cost of investing in ETFs and stocks*. Vanguard is lowering the costs of investing with:

  • Commission-free ETF transactions. Vanguard brokerage clients may make commission-free transactions in Vanguard’s entire line-up of 46 low-cost ETFs, which is the largest suite of ETFs available without commissions.
  • Ultra-low equity commissions. Most Vanguard brokerage clients will pay $7 or $2 to trade stocks and non-Vanguard ETFs®.

“For 35 years, Vanguard has been committed to reducing the cost of investing in mutual funds for our clients. Now, Vanguard is expanding our low-cost commitment to ETFs,” said Vanguard CEO Bill McNabb. “Importantly, Vanguard offers a greater choice of ETFs with expense ratios that are among the lowest in the industry.”

Unlike competitors’ commission schedules, the same commissions apply to both transactions conducted on Vanguard.com and those executed with the assistance of a Vanguard brokerage representative.

Vanguard: An ETF Leader

Vanguard offers 46 ETFs that seek to track an array of domestic and international stock benchmarks, as well as broad and discrete segments of the domestic bond market. The average expense ratio of Vanguard ETFs is 0.18%, compared with the industry average of 0.52% (source: Lipper, Inc. as of December 31, 2009).

Vanguard is the industry leader in ETF net cash flow this year, with an estimated $11.7 billion through April 29, 2010, according to Bloomberg data. The firm’s ETF assets have more than doubled over the past year and now total more than $100 billion. Vanguard offers some of the industry’s largest and best selling ETFs, including the $15 billion Vanguard Total Stock Market ETF (VTI), the $24 billion Vanguard Emerging Markets ETF (VWO), and the $7 billion Vanguard Total Bond Market ETF (BND), according to Bloomberg data. Vanguard ETFs also enjoy high awareness and loyalty scores from ETF investors, according to Cogent Research.

Building a Diversified ETF Portfolio

Vanguard brokerage clients are now able to tailor a portfolio of Vanguard ETFs to meet their long-term goals, contribute to it monthly, and rebalance it annually (or whenever they determine)—all without paying a single commission.

“To be clear, our commission-free offer is not intended to encourage the active trading of ETFs, which we believe is counterproductive and rarely successful. Rather, it enables investors to construct a balanced, long-term portfolio of low-cost Vanguard ETFs and add to the portfolio regularly,” said Mr. McNabb.

Educating Investors on ETFs

While ETFs offer a low-cost means of obtaining broad exposure to the stock and bond markets, these products feature risks and costs not associated with traditional index funds. To help investors better understand ETFs, Vanguard has developed educational content and interactive tools on its website. A “Compare ETFs” tool that enables investors to conduct a side-by-side review of the expense ratios, portfolio characteristics, and other data of nearly 100 exchange-traded products will be available later this month.

About Vanguard

Vanguard, headquartered in Valley Forge, Pennsylvania, is one of the world’s largest investment management companies and a leading provider of company-sponsored retirement plan services. Vanguard manages more than $1.4 trillion in U.S. mutual fund assets. Vanguard offers more than 160 funds to U.S. investors and more than 50 additional funds in non-U.S. markets.

All figures are as of April 30, 2010, unless otherwise noted.

* This pricing applies to assets bought and sold through Vanguard Brokerage Services, a division of Vanguard Marketing Corporation, Member FINRA. For full details, including limits and exclusions, see the Vanguard Brokerage Services Commission and Fee Schedules on Vanguard.com.

Stocks and ETFs are subject to risk, which may result in the loss of principal. International ETFs involve additional risks, including currency fluctuations and the potential for adverse developments in specific countries or regions. ETFs that invest in emerging markets are generally more risky than those that invest in developed countries. Bond ETFs are subject to interest rate, credit, and inflation risk.

Vanguard ETFs are not redeemable with an Applicant Fund other than in Creation Unit aggregations. Instead, investors must buy or sell Vanguard ETF Shares in the secondary market with the assistance of a stockbroker. 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.

For more information about Vanguard ETF Shares, visit www.vanguard.com, call 877-992-8327, or contact your broker to obtain a prospectus. Investment objectives, risks, charges, expenses, and other important information are contained in the prospectus; read and consider it carefully before investing.

Vanguard Marketing Corporation, Distributor of the Vanguard Funds.

Vanguard
For further information please contact
John S. Woerth, 610.669.6224
Linda S. Wolohan, 610.503.2947
Rebecca Katz, 610.503.2273
Amy Chain, 610.669.2149

Visit Vanguard’s pressroom at www.onlinepressroom.net/vanguard/

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