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My Review of Vanguard Brokerage Services 2011

Updated on March 16, 2011
Vanguard Logo VBS
Vanguard Logo VBS | Source

This is my third article about brokerage review. In my previous article, I have provided reviews about Just2Trade, Fidelity, E*trade and Zecco brokerage. In this article, I’ll review Vanguard Brokerage Services also known as VBS. Vanguard is known for low cost mutual fund since the expense ratio is usually lower than most mutual fund provider. Not until recently, Vanguard will not be my first choice to trade. The commission for trading is $7.00 per trade for first 25 trades and $20 for subsequent trades. However trading Vanguard ETFs is free, for any account balance. This is a great choice for most passive investor.

This article about Vanguard online broker / brokerage review. I’ll review Vanguard Brokerage Services for financial investing. As an investor or trader, finding a good reliable online brokerage to trade stocks online is important. Details about trading etf, buy stocks, buy mutual funds.

Background

Vanguard was established on 1975 by John Bogle. John Bogle is known for his creation of index fund for investor. The current headquarter is located at Malvern Pennsylvania USA.It currently uses its own clearing Vanguard Brokerage Services as their clearing / asset custodial. Vanguard Brokerage Services, member of FINRA & SIPC, holds and clears all Vanguard client assets. All Vanguard accounts are insured under SIPC (up to $500,000 / $250,000 cash balance) and supplemental Lloyd’s of London coverage (up to $250 million) provided by its own clearing firm.


What are the details?

Vanguard Brokerage Services offer Stock, Exchange Traded Fund (ETF), Bond, Mutual Fund, and CD. As mentioned above, the commission fees for trading is $7.00 per trade up to 25 trades and $20 for subsequent trades. The best deal of using Vanguard is their offering of ETF and Mutual fund. You get free trade to buy or sell vanguard ETF up to 25 trades per year for each ETF. The following is the details fees related to Vanguard brokerage Services:

  • Products: trade Stocks, options, mutual funds, bonds, CDs, foreign securities, insurance, commercial paper

  • Market Orders: $7.00 up to 25 trades per year, subsequent $20.00

  • Limit Orders: & $7.00 up to 25 trades per year, subsequent $20.00

  • Vanguard ETFs: $0.00 (Free) up to 25 trades

  • Mutual Funds: $35.00 for transaction-fee funds. NTF funds available

  • Options: $30.00/trade+$1.50/contract

  • Minimum to Open: $3000 ($0 VBS)

  • Account Inactivity Fee: $0.00

  • Account Maintenance fee: $20.00/year (balance < $50K)

  • ACAT In/Out: $0.00

  • Maximum Margin Rate: Unknown

 

How to open Vanguard Brokerage Services account?

Opening account is very straight forward by filling its online application. Most people will get their account information within 10 minutes after application submission. To apply for margin account, option trading account and Money Market Sweep Account, you will need to fill separate form. You need to mail in the forms for this application. For foreigner, you might need to check with Vanguard customer services. It is possible to open an account with filling the application form manually. After completing this process, you are ready to trade stock online or trade etf online.


My Experience

I have opened the Vanguard account for 3 months now. Opening Vanguard account is fast and easy. It took me 10 minutes to fill the application online and open my account. ACH electronic transfer also can be setup through online easily. Vanguard also offers various mutual funds as well as ETF for my account. One of the most famous things with vanguard is the low expense ratio of the funds. This can be very significant for long term investor most of the funds have lower than 0.50% expense ratio. For example Vanguard Total Stock Market ETF (VTI) only has 0.07% expense ratio. This means if you have invested $10,000 in this ETF, your expense for holding this ETF is only $7.00. There are currently 46 ETFs are offered by Vanguard.


Inside Vanguard Brokerage Services

Click thumbnail to view full-size
Vanguard Account OverviewVanguard researchTrading PageETF fees
Vanguard Account Overview
Vanguard Account Overview
Vanguard research
Vanguard research
Trading Page
Trading Page
ETF fees
ETF fees

Pros of Vanguard Brokerage

  1. Free trades on 62 Vanguard ETFs as well as Vanguard mutual funds
  2. Easy to open an account
  3. Low expense ratio ETFs and mutual funds
  4. Friendly customer service
  5. No limit balance to buy ETF shares

Cons of Vanguard Brokerage

  1. $20 account service fees
  2. Very difficult to navigate the hidden trading system
  3. Only Vanguard ETF is free & limitation of 25 trades per ETF
  4. Long hold for money transfer
  5. Difficult to get a margin account with low account balance
  6. No after hour trading

If you need more details about the advantage & disadvantage of opening Vanguard brokerage account, please check my next article.

I think using Vanguard Brokerage account is suitable for people who will do buy and hold of Vanguard ETFs. If you look to trade ETFs actively or trade online stocks, I will advise to use other brokerages such as fidelity or Zecco (10 free trades per month with $25,000 balance).

Vanguard ETFs list - updated on 8/8/2010

(click column header to sort results)
No  
Name  
Ticker  
Category  
Expense Ratio  
1
Short-Term Bond
BSV
Bond - Short-term Treasury
0.12%
2
Short-Term Government Bond
VGSH
Bond - Short-term Treasury
0.15%
3
Short-Term Corporate Bond
VCSH
Bond - Short-term Investment
0.15%
4
Intermediate-Term Bond
BIV
Bond - Inter-term Treasury
0.12%
5
Intermediate-Term Government Bond
VGIT
Bond - Inter-term Treasury
0.15%
6
Mortgage-Backed Securities
VMBS
Bond - Inter-term Treasury
0.15%
7
Total Bond Market
BND
Bond - Inter-term Treasury
0.12%
8
Intermediate-Term Corporate Bond
VCIT
Bond - Inter-term Investment
0.15%
9
Extended Duration Treasury
EDV
Bond - Long-term Treasury
0.14%
10
Long-Term Bond
BLV
Bond - Long-term Treasury
0.12%
11
Long-Term Government Bond
VGLT
Bond - Long-term Treasury
0.15%
12
Long-Term Corporate Bond
VCLT
Bond - Long-term Investment
0.15%
13
High Dividend Yield
VYM
Stock - Large-Cap Value
0.20%
14
Mega Cap 300 Value
MGV
Stock - Large-Cap Value
0.13%
15
Value
VTV
Stock - Large-Cap Value
0.14%
16
Dividend Appreciation
VIG
Stock - Large-Cap Blend
0.23%
17
Large-Cap
VV
Stock - Large-Cap Blend
0.12%
18
Mega Cap 300
MGC
Stock - Large-Cap Blend
0.13%
19
Total Stock Market
VTI
Stock - Large-Cap Blend
0.07%
20
Growth
VUG
Stock - Large-Cap Growth
0.14%
21
Mega Cap 300 Growth
MGK
Stock - Large-Cap Growth
0.13%
22
Mid-Cap Value
VOE
Stock - Mid-Cap Value
0.14%
23
Extended Market
VXF
Stock - Mid-Cap Blend
0.13%
24
Mid-Cap
VO
Stock - Mid-Cap Blend
0.14%
25
Mid-Cap Growth
VOT
Stock - Mid-Cap Growth
0.14%
26
Small-Cap Value
VBR
Stock - Small-Cap Value
0.14%
27
Small-Cap
VB
Stock - Small-Cap Blend
0.14%
28
Small-Cap Growth
VBK
Stock - Small-Cap Growth
0.14%
29
Consumer Discretionary
VCR
Stock - Sector
0.25%
30
Consumer Staples
VDC
Stock - Sector
0.25%
31
Energy
VDE
Stock - Sector
0.25%
32
Financials
VFH
Stock - Sector
0.25%
33
Health Care
VHT
Stock - Sector
0.25%
34
Industrials
VIS
Stock - Sector
0.25%
35
Information Technology
VGT
Stock - Sector
0.25%
36
Materials
VAW
Stock - Sector
0.25%
37
REIT
VNQ
Stock - Sector
0.13%
38
Telecommunication Services
VOX
Stock - Sector
0.25%
39
Utilities
VPU
Stock - Sector
0.25%
40
Emerging Markets
VWO
International
0.27%
41
Europe Pacific
VEA
International
0.15%
42
European
VGK
International
0.16%
43
FTSE All-World ex-US
VEU
International
0.25%
44
FTSE All-World ex-US Small-Cap
VSS
International
0.40%
45
Pacific
VPL
International
0.16%
46
Total World Stock
VT
International
0.30%

Other people complaints from research

Other complaints about Vanguard are:

  1. Long wait time for customer service to buy corporate bond through their Fixed Income desk
  2. Vanguard doesn't let you cancel mutual fund orders.
  3. Difficult to navigate through their website
  4. No mobile app for trading

Disclamier

Disclaimer: I have no affiliation with Vanguard other than I use their brokerage to trade ETFs. Please do your own research for additional details. All information is as updated as August 9, 2010. Please trade responsibly.

Update - 10/28/2010

Vanguard has launch additional ETFs for tracking S&P 500 index. There are currently 62 ETFs for free trade. Note: Most of these new ETFs has small market capitalization. This mean The ETF will be more volatile and bid-ask spread might be high.

  1. Vanguard S&P 500, VOO
  2. Vanguard S&P 500 Value, VOOV
  3. Vanguard S&P 500 Growth, VOOG
  4. Vanguard S&P Mid-Cap 400, IVOO
  5. Vanguard S&P Mid-Cap 400 Value, IVOV
  6. Vanguard S&P Mid-Cap 400 Growth, IVOG
  7. Vanguard S&P Small-Cap 600, VIOO
  8. Vanguard S&P Small-Cap 600 Value, VIOV
  9. Vanguard S&P Small-Cap 600 Growth, VIOG

Last Update 3/14/2011

Comments

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    • Daddy Paul profile image

      Daddy Paul 4 years ago from Michigan

      "No after hour trading" I did not know Vanguard did not offer this service.

    • chan0512 profile image
      Author

      chan0512 6 years ago from Camarillo, CA

      Karen,

      Sorry to hear your issue. Try the Vanguard Customer Service by calling them, I know they are very helpful from my past experience. About the cost basis, from my experience the new brokerage will not update the cost basis, you need to keep the information on your own.

    • profile image

      Karen 6 years ago

      We transferred DRIP accounts to Vanguard after my father died. we are still waiting for VBS to update the cost-basis. it has been three months. I even sent them all the figures on a spread sheet. what do these people need to do this, another act from Congress? getting thoroughly disgusted. should take my mother's million bucks to fidelity.

    • chan0512 profile image
      Author

      chan0512 7 years ago from Camarillo, CA

      Daniel,

      I don't think you can open a Vanguard Brokerage Services (VBS) account directly. To open VBS, you will need to be in US and has an address here. You can try your local brokerage which has an access to NYSE or Nasdaq hence the Vanguard ETFs are listed in NYSE. You can also try other online brokerages which will accept a non us citizen account (i.e. Interactive Brokers (IB), TradeKing, etc). Please note: You may need to exchange your local currency money (i.e. Ringgit) to US Dollar and vice versa to open above accounts. Hope this help.

    • profile image

      daniel  7 years ago

      thank you for your excellent review about the vanguard pros and cons ...by the way i'm wondering if i'm not a U.S Citizen , will i able to invest as well? i'm from malaysia from kuala lumpur.eagerly need your advise and ways of invest securely without fraud compromises.

    • chan0512 profile image
      Author

      chan0512 7 years ago from Camarillo, CA

      Emdi,

      Thanks for your kind words. Please stop by more often. More to come especially investment articles.

    • emdi profile image

      emdi 7 years ago

      U have one of the best investment hubs in HubPages

    • chan0512 profile image
      Author

      chan0512 7 years ago from Camarillo, CA

      @Lilly Thanks for your comment

    • LillyGrillzit profile image

      Lori J Latimer 7 years ago from The River Valley, Arkansas

      Thank you for excellent information on trading and the brokerage firms that do the trading. :0)

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