Vanguard Escalates ETF Fee War

Vanguard, the fund issuer known for its plain-vanilla index-based products and low costs, announced today it will be slashing investor costs on its trading platform for nearly all ETFs.

The firm has long offered commission-free trading on its own ETFs, but now expects to offer commission-free ETF trading on roughly 1,800 ETFs starting in August on online trades.

"This is an unexpected move by Vanguard, and absolutely the next salvo in the ETF fee war," said Dave Nadig, managing director of ETF.com. "Like the other salvos we've seen, I wouldn't expect this one to go unanswered."

Leveraged & Inverse Funds Excluded

There are a little over 2,100 ETFs currently trading. The Vanguard announcement notes that the inverse and leveraged ETFs, which the press release describes as “highly speculative and complex,” will not see their trading commissions waived. Previously, Charles Schwab had offered the largest commission-free trading program, with more than 200 from a variety of issuers included.

“Vanguard has led the industry in reducing the cost and complexity of investing for all investors for more than four decades. We’ve driven down the costs of funds. We’ve driven down the cost of advice. Now, we’re driving down the cost of investing in ETFs,” said Karin Risi, managing director of the firm’s Retail Investor Group.

“Investors will be able to assemble balanced, diversified portfolios from virtually the full universe of ETFs to meet their financial goals, add additional assets regularly, and periodically rebalance—all without paying a commission,” she added.

Contact Heather Bell at [email protected]