Vanguard Hidden Fees
Online brokerage companies charge customers a wide variety of fees. The most common type of fee is a “trading fee” or “commission fee.” Brokerages assess this fee for executing a trade or buying/selling financial securities. It’s usually a flat fee or percentage of the total trade value.
Brokerage companies also charge fees not related to buying and selling securities. These may include account service fees or wire transfer charges.
Account Service Fee
Vanguard charges a $20 annual “account service” fee for each brokerage account.
However, there are several exceptions where Vanguard waives this charge:
- Clients who have $1 million or more in qualifying Vanguard assets.
- Clients that signed up for e-delivery of statements, reports, and updates.
- Clients who have an organization or trust account registered under an employee identification number (EIN).
- Brokerage accounts enrolled in an advisory program serviced by an affiliate of Vanguard.
Wire Transfer Fee
Vanguard charges a $10 fee for each holding transferred via wire.
Vanguard waives the wire transfer fee for clients with $1 million or more in qualifying Vanguard assets.
American Depositary Receipts (ADRs) Fees
American Depositary Receipts (ADRs) are financial instruments that allow U.S. investors to invest in foreign companies. Banks that hold ADRs on behalf of investors can charge specific fees as outlined in the ADR prospectuses.
One type of ADR fee is a “pass-through” fee, which is collected from Vanguard by the Depository Trust Company (DTC). Vanguard automatically deducts this fee from the client’s account.
The DTC may also collect other fees, including dividend processing fees.
Foreign Securities Transactions Fees
For non-DTC-eligible securities (different than ADRs), there is a $50 processing fee. This fee is in addition to the commission.
Vanguard may charge a commission fee each day if a trade takes many days to execute.
There may be additional fees if the trade is executed on local markets rather than through an intermediary.
Tax Filing for Master Limited Partnerships (MLPs) in an IRA
Vanguard Fiduciary Trust Company (VFTC) is the custodian for any MLP held in an IRA. As such, the IRS requires VFTC to file MLP tax forms. VFTC charges a $300 fee per account for these tax filings.
Vanguard Trading Fees
For the most part, Vanguard charges $0 to trade stocks and ETFs online. However, mutual funds, options contracts, CDs, and bonds may incur trading fees or “commissions.” Further, trades placed by phone may incur additional costs.
Stocks
There are no transaction fees for stocks traded online. Stocks traded by phone incur a $25 fee, but Vanguard waives this fee for individuals with $1 million or more invested in Vanguard assets.
ETFs (Exchange-Traded Funds)
Vanguard has its own ETFs but also allows for trading ETFs managed by other companies. There are no transaction fees for ETFs traded online. However, ETFs managed by other companies will incur a $25 fee when traded by phone. Again, Vanguard waives this charge for individuals with $1 million or more invested.
Mutual Funds
Like ETFs, Vanguard has its own mutual funds and allows trading mutual funds from other companies.
There are no transaction fees for Vanguard-managed mutual funds. But some Vanguard funds may charge special purchase fees or redemption fees. These fees vary depending on the fund and range from 0.25% to 1.00% of the transaction.
Vanguard has minimum investment requirements for its mutual funds. The minimum varies by the fund, ranging from $1,000 to $100,000.
Vanguard offers three categories of mutual funds managed by other companies:
- No-transaction-fee (NTF) mutual funds,
- Transaction-fee (TF) mutual funds, and
- Load mutual funds.
No-Transaction-Fee (NTF) Mutual Funds
There are no fees for NTF mutual funds traded online. Like Vanguard mutual funds, there is a $25 fee for trades placed by phone. Again, Vanguard waives this for investors with more than one million invested in Vanguard funds.
Transaction-Fee (TF) Mutual Funds
The fees for TF mutual funds depend on the number of assets invested in Vanguard ETFs & mutual funds. The costs also vary whether transacted online or by phone.
Clients with less than $1 million invested in Vanguard funds incur a $20 fee per trade online and an added $25 fee if they place the trade by phone.
For Clients with $1 million to $5 million in assets, online trades are $0 for the first 25 trades and $8 for each trade after that.
Clients with more than $5 million in Vanguard funds receive 100 free trades and then pay $8 per trade after that.
Load Mutual Funds
The fees for load mutual funds vary by the share class: A, B, & C.
Class A shares incur a front-end load that varies by fund. It may be as high as 5.75%.
Class B & C Shares incur a back-end load, which decreases to 0% over several years.
All share classes may have sales charges and minimum purchases that are fund specific.
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Options Contracts
The fees to trade options also vary based on the number of assets invested in Vanguard funds.
For clients with less than $1 million invested in Vanguard funds, there is a $1 per contract fee.
Clients with $1 million to $5 million in assets receive 25 free trades, and clients with more than $5 million get 100 free trades. After that, the fee is $1 per contract.
All option exercises and assignments are commission-free.
Fixed-Income Securities
The cost of trading CDs (certificates of deposit) and bonds varies based on the instrument type. And whether it is a new issue or traded on the secondary market.
There is no charge for new issues except for mortgage-backed securities, which have a fee of $35 per trade.
Trades on the secondary market incur higher fees except for U.S. Treasury securities which are $0 per transaction.
CDs, U.S. government securities, corporate bonds, and municipal bonds have a fee of $1 per $1,000 face amount with a maximum of $250.
Mortgage-backed securities and unit investment trusts (UITs) have a fee of $35 per trade.
In addition to the abovementioned fees, a $25 fee will be added to transactions traded on the secondary market by telephone. Vanguard waives this fee for clients with $1 million or more invested.
Vanguard also has minimum investment requirements for its fixed-income instruments. The minimum investment for U.S. government agency securities, corporate bonds, CDs, and U.S. Treasury securities is $1,000. The minimum for municipal bonds is $5,000.
All Vanguard fees may be subject to change. Reach out to Vanguard for the latest updates and details.
Margin Rates
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Debit Balance
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Vanguard Margin Rates
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under $19,999
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13%
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$20,000 – $49,999
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12.5%
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$50,000 – $99,999
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12%
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$100,000–$249,999
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11.5%
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$250,000–$499,999
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11%
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$500,000–$999,999
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9.75%
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above $1,000,000
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call
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Vanguard Review
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Updated on 8/6/2024.
Arthur Chachuna is a professional personal finance blogger, and the owner of Brokerage-Review.com.
He has been an avid investor for 25 years, and has a background in both applied math and programming.
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