Vanguard at a glance
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Vanguard Portfolio Watch
Vanguard Portfolio Watch is a tool that automatically examines your portfolio to see how it compares to criteria that you and Vanguard have set. The goal is to make sure your assets are diversified and minimize risks where possible. You can include not only your Vanguard assets, but all holdings, so that you can get a comprehensive picture of your financial life and where you might have unidentified risk.
Once you’ve loaded your holdings into the tool, Portfolio Watch will give you a breakdown of what kinds of funds you own by a number of factors, for example, company size or investing style (value vs. growth). Then if there’s a place where you need more exposure – say you own too many funds invested in small companies – it can recommend the funds you need to purchase to even out your portfolio. It’s a neat tool to get a broad perspective on what you own and what you might like to own.
Pros: Where Vanguard stands out
Vanguard was created on the vision and positive ethos of founder Jack Bogle to help individual investors build wealth, and that’s most obvious in the broker’s education and planning tools. The broker offers articles, videos and podcasts that inform clients on the state of the market and help investors make smart financial decisions with a long-term mindset.
The broker’s site includes tons of retirement-planning tools, calculators and resources for investors of all ages. Investors can set up plans for various goals, compare funds side-by-side, screen for funds, as well as project college and retirement costs so that you can meet them.
Vanguard has long been synonymous with low-cost funds, and that tradition continues. In addition to its own ETFs, Vanguard’s mutual funds number more than 130.
Whether you choose one of its mutual funds or ETFs, you can be sure you’re getting a good deal. Besides not charging any sales load, Vanguard’s funds have among the lowest expense ratios in the industry, fees that could otherwise really eat into your returns over time.
Vanguard says that its average mutual fund has an expense ratio of a razor-thin 0.10 percent. That means you’ll pay just $10 annually on average for every $10,000 you have invested in its funds. That compares to 0.63 percent across the rest of the industry, based on 2019 data from Morningstar and Vanguard. That’s a huge advantage for Vanguard, and increases your average annual return by more than one-half of a percent annually.
The average ETF expense ratio was even cheaper on Vanguard’s ETFs, at just 0.06 percent, compared to 0.25 percent for the industry as a whole in 2019.
Of course, you won’t have to be a Vanguard customer to buy its funds, but its no-fee commission structure makes it easier and cheaper to do so.
Commission-free stocks and ETFs
Vanguard has joined the ranks of the major online brokerages that have lowered commissions on stocks and ETFs to $0. But its decision was hardly in the vanguard at all, as the company was among the last major online brokers to make the move to commission-free. But the shift definitely behooves a fund company that’s long been known for its investor-friendly pricing. The new pricing structure largely does away with the previous too-complex, multi-tiered pricing system, where commissions were determined on how much you had invested in Vanguard funds.
A nice perk that could be overlooked is that Vanguard does not charge you to place an order of its own funds (either mutual funds or ETFs) by phone, unlike many other brokers. However, it does charge you $20 to $25 to order ETFs from other fund companies via phone, depending on how much you have invested in Vanguard funds. Stock orders by phone will run you $20 to $25, as well, though customers with more than $1 million in Vanguard funds will receive this service for free.
No-transaction-fee mutual funds
Vanguard offers a truly astounding number of mutual funds on its platform: more than 14,000. So chances are that you can find what you’re looking for in a fund. Of these, more than 9,750 can be purchased without a sales load, while more than 3,400 can be traded without a transaction fee. That compares nicely to some of the top in the industry, such as Charles Schwab and TD Ameritrade, both of which have more than 4,000 no-transaction-fee funds.
Vanguard will work just fine for individual investors who want to buy and hold their investments, especially if those investments are Vanguard funds.
- The wealth of education and planning resources help long-term investors create a financial plan that is easy to stick to and works for them.
- Vanguard’s low-cost funds cover many areas of the investing world, giving you a ton of options, and you can trade them without a commission or transaction fee.
- Active investors probably won’t have their needs met, with little in the way of fundamental research or trading tools being offered.
Investors looking for no-commission ETFs or mutual funds can turn to almost any other broker offering them, including TD Ameritrade and E-Trade. Active investors might have a look at TD Ameritrade or Interactive Brokers, both of which are geared for more actively managed portfolios, have customizable trading platforms and offer access to a wide range of securities.
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