Vanguard won’t charge commissions for online trading

LOS ANGELES — Vanguard says it will no longer charge commissions on online trading of stocks and options.

The move, which the company announced Thursday, is effective immediately for Vanguard Brokerage clients.

The industry giant has been offering commissionfree trading of Vanguard exchange-traded funds, or ETFs, since 2010. It eliminated commissions on nearly all other ETFs in the industry in August 2018.

“It really is about continuing the all-in, low cost for our investors, whether that’s mutual funds, ETFs, investment advice or stocks and options,” said Karin Risi, managing director of Vanguard’s Retail Investor Group.

The Valley Forge, Pennsylvania-based company estimates that its expense ratio reductions of funds and ETFs generated more than $750 million in cumulative savings for its clients over the last four years. The company’s asset-weighted average expense ratio is 0.11% for mutual funds and 0.07% for ETFs, as of the end of 2018.

Vanguard’s latest expansion of zero-commission trading is part of a broader industry trend in recent years that has led to lower costs for investors in everything from trading to financial advice to the annual expense for investing in funds.

In October, Fidelity investments, the largest online brokerage, said it was dropping commissions for online trades of U.S. stocks, ETFs and options. Charles Schwab, TD Ameritrade and ETrade Financial have also moved to lower or eliminate trading fees.

The trend is a bid by investment brokerages to attract customers at a time when many have grown more vocal about the cost of investing.

Brokers make most of their money via interest income on their clients’ deposits, but fees and commissions account for a significant share of their earnings also.

Research has shown that investments with lower costs tend to be more successful in the long run, in part because higher-cost rivals have to perform that much better just to get to the same after-fee performance.