Vanguard fees: What account, investment (and other!) fees are there?

Vanguard is a leading global investment management company. It offers low fees and a wide selection of funds, especially suiting passive and long-term investors.

If you are looking to invest, it’s important to fully understand the costs. This guide looks at all Vanguard fees to help you decide if it works for you.

If you’re interested in converting your investment profits, then you may need a solution for holding several currencies. With the Wise account, you can hold and convert money in 56 currencies.

See all currencies

What fees does Vanguard charge?

Since its founding in 1975, Vanguard has prided itself on low-cost fund investing. These costs dropped further from January 2020, when Vanguard removed most of its product fees.

Vanguard offers no transaction fees or commissions¹ on its Exchange Traded Funds (ETFs) and most of the mutual funds that it offers. But there are other charges. These come in three main categories:

• Annual account fees for holding a brokerage account
• Transaction fees for buying and selling some products
• Ongoing operating expenses for funds

Vanguard account fees

There is an annual account fee for all accounts. For the most common brokerage and standard IRA accounts this is $20 per year. Vanguard waives the fee if you sign up for e-delivery of statements.

Some other account types have different fees². The main ones include:

Account type	Fees
Standard brokerage accounts (These include non-retirement, Roth, traditional and SEP-IRA, UGMA, UTMA, and education savings accounts)	Standard $20 annual account fee
SIMPLE IRAs	$25 per year for each mutual fund held
403(b) plans	$60 per year per participant (charged as $5 per month)
401(k) and Individual Roth 401(k) plans	$20 for each mutual fund held

Vanguard investment fees

There are no transaction fees for purchases of any ETFs or Vanguard mutual funds. Likewise, for some mutual funds from other companies, all stocks, and US Treasury securities.

However, some other products do have a fee³. These include:

Product	Fee
Select mutual funds from other companies (detailed in the prospectus)	$20 per trade for clients with less than $1m invested with Vanguard. There are allowances of free trades and reduced costs for higher investors.
Options	$1 per contract fee (free allowances for clients with over $1 million invested)
Certificates of Deposit (CD), government securities, corporate bonds, and municipal bonds	No charge for new issues, but secondary trading carries a fee of $1 per $1,000 value
Mortgage-backed securities	$35 per trade
Unit Investment Trusts (UITs)	$35 per trade

Operating Expenses

Vanguard has limited upfront investment fees, but there are ongoing charges. These are known as operating expenses. Fees cover the running costs of the fund, such as manager fees, marketing, administration, and legal costs.

Each fund has a different charge. Such expenses are paid directly out of the fund returns, so you won’t see an additional charge for them.

To get the lowest operating expenses, it’s important to understand the difference between Vanguard’s products.

ETFs will usually offer the lowest fees for investors. Mutual funds (Investor Shares, Admiral Shares and, Institutional Shares) have differing fees and minimum investment levels.

The average expense ratios⁴ for different fund types include:

• ETFs: 0.06%
• Admiral Shares: 0.14%
• Investor Shares: 0.27%
• Institutional shares: 0.08% (these are for institutional investors, and have a minimum investment of $5 million)

Vanguard is not alone in charging such fees – all investment management companies do. But Vanguard has some of the lowest expenses in the industry. The average expense ratio for Vanguard funds is 0.1%, the industry average is 0.57%³.

Minimum investment requirements

Vanguard imposes minimum investment amounts for all of its ETFs and mutual funds. This is one of the main limitations of Vanguard – making it less suitable for smaller investors.

The minimum investments vary for different fund types:

• ETFs: there is no fixed initial minimum investment. You can invest from as low as the price of 1 share with each ETF⁵
• Investor Shares: $1,000 (rising to $3,000 for actively managed funds)
• Admiral Shares: $3,000 (rising to $50,000 for actively managed funds and $100,000 for some sector-specific funds⁶)

Some actively managed funds have higher fees, and you should always check these in the fund profile.

How do you avoid Vanguard fees?

There are ways you can avoid, or lower, many of Vanguard’s charges. You can avoid account fees in most cases.

Vanguard waives the $20 annual fee for standard brokerage accounts if you opt to receive electronic statements and other communications. It is also waived if you hold over $10,000 in Vanguard products⁷.

For other account types, different rules apply. These include:

• For SIMPLE IRAs, the fee is waived if you hold over $50,000
• With 403(b) plans, you cannot avoid the fee
• For 401(k) and Individual Roth 401(k) plans, if any participant in the plan holds over $50,000 with Vanguard the fee is waived

Operating expenses are the main fee paid on most fund investments. You can minimize these by selecting funds with lower expenses. ETFs offer the lowest, followed by Vanguard’s Admiral Shares (but these have higher minimum investment).

Transaction fees do not apply for the majority of funds offered. If you choose to invest in a product with a transaction fee, there is no way to avoid it.

Does Vanguard have other fees?

As with many services, reading the small print is important! Some other costs can occur with Vanguard. The main ones to watch out for are:

• Securities transaction fee. This is a government (SEC) imposed fee on some fund and stock transactions. It will be passed on and charged separately by Vanguard.

• Wire transfer fee. There is a $10 fee for wire transfers to other accounts. You can avoid this by using an ACH transfer⁸.

• Phone assistance fees. Some products have a $25 fee if deals are placed by phone⁹ (but not online). These include ETFs and mutual funds from other companies, and all stocks. The fee only applies if your total investment with Vanguard is under $1 million.

• Purchase and redemption fees. Some funds have transaction fees for buying or selling. These are between 0.25% and 1%, and currently only apply to 14 funds¹⁰.

• Automated advisory. Vanguard offers an investment and advisory service called Vanguard Digital Advisor. If you enroll for this, there is a charge of approximately 0.15% per year¹¹.

Pros and cons of Vanguard

Pros

• No trading costs for many funds. No transaction fees/trading commission for all ETFs, stocks, and most funds. Plus, the annual account fee can be easily avoided for most accounts.

• Low ongoing fees. Operating expenses are amongst the lowest on the market (0.1% compared to a market average of 0.57%).

• A wide selection of funds. These include both Vanguard funds and funds from other providers (over 3,100 no-fee funds at present).

• Low-cost Admiral Shares. These are selected funds with the lowest expense ratios, but higher minimum investment.

• Good educational resources. Vanguard offers a range of information sources, along with planning and calculation tools. These are especially useful for retirement investors.

Cons

• Most mutual funds have minimums of $1,000 or $3,000, which can limit options for smaller, or beginner, investors.

• Account fees apply for some investors. For most accounts fees can be avoided, but only if you use e-statements. For some accounts, they apply regardless.

• Accounts are available for US citizens only. Investment products and services on Vanguard.com are intended to be made available to U.S. residents. If you reside outside the US you will need to use the global Vanguard products and services.

If you want to get US account details as a non-resident, then one way is to join Wise. With a Wise account, you can get international account details, such as a US routing number and account number. It only takes a few seconds to open a new balance in the currency you need.

Who is Vanguard best for?

Vanguard offers some of the lowest costs for fund investment, but it is not for everyone.

Vanguard is suited to longer-term investors who want to buy and hold low-cost funds. It suits higher balances, especially for investors who want more choice of mutual funds.

It is less suitable for small-scale investors. There are relatively high minimum investment levels for mutual funds. Minimum levels are common in the industry, but some providers offer lower investments if you make regular deposits.

Regular, and more active, traders of funds or stocks will be put off by the lack of a sophisticated trading platform or real-time data. Many of the charges and minimums are also set up to discourage frequent trading.

Vanguard fees for non-US residents

Vanguard services and funds, including most of what this article has covered, are targeted at US residents. There are options with Vanguard for investors in other countries though.

Vanguard offers services in many other countries across the Americas, Europe, and Asia. The costs and fee structure for investment in each country vary. But the principle of offering low-cost investment holds.

In the UK for example, there is an annual account fee of 0.15%, and an average expense cost of 0.2%¹².

Wise - an easy way to manage multiple currencies

Vanguard offers a reliable and low-cost solution for fund investment in the US. If you are looking for a way to manage money in different currencies, then a Wise account can help you manage and convert your money.

Wise offers a multicurrency account that allows you to hold funds in multiple currencies. Holding multiple currencies is free. You can send and receive money, or simply convert between currencies, at a low cost, and at the mid-market exchange rate (the one you see on Google).

You can enjoy the returns on your international investment, without extortionate conversion fees.

Get a Wise account in minutes

Sources:

1. Vanguard commission-free ETF
2. Vanguard account fees
3. Vanguard average expense ratio
4. Vanguard expense ratios
5. Vanguard ETF fees
6. Vanguard mutual funds fees
7. Vanguard avoid account fees
8. Vanguard wire transfer fee
9. Vanguard phone assistance fees
10. Vanguard purchase and redemption fees
11. Vanguard automated advisory
12. Vanguard UK fees

Sources checked 8 March 2021