Personal Investors

Exchange-traded funds (ETFs) are built like conventional mutual funds but are priced and traded like individual stocks. At Vanguard, they combine the advantages of indexing with the trading flexibility and continual pricing of individual stocks and bonds.

Are ETFs right for you?

An ETF may be appropriate if you:

  • Are seeking potentially lower costs for your long-term investments.
  • Want the flexibility to buy and sell on an exchange any time the market is open, with the ability to use techniques such as selling short and placing limit orders.
  • Understand the risks of investing in the stock and bond markets.

Why choose Vanguard ETFs

Significant savings

You keep more with Vanguard ETFs because we manage our funds at cost—it costs you only what it costs us to run them. Our average ETF expense ratio is 0.17% compared with the industry average of 0.53% (Lipper Inc., as of December 31, 2010).

No commissions

Vanguard Brokerage clients trade our ETFs commission-free, another way you can receive more value for your investment.*

Indexing expertise

In more than 30 years of indexing, we've honed a strategy of selecting indexes that best represent the target markets and then tracking them as closely as possible. You can see for yourself by comparing the performance of our funds with their benchmarks.

Client ownership

Our unique client ownership structure allows us to stay focused on your long-term needs—not the latest investment fads. We're owned by our funds, which are owned by clients like you—so we align our interests with yours.

Vanguard ETFs compared with Vanguard index funds

Index mutual funds and ETFs can be similar in many ways. In fact, at Vanguard, they have the same ingredients: Same underlying index fund, same holdings, and similar investment risks. They both also feature generally low operating costs and can provide potential tax-efficiency.

Still, there are some important differences to be aware of and those differences are outlined in the table below.

How they're different

Vanguard ETFs

Vanguard index mutual funds

Buying and selling shares

Through a brokerage account, including Vanguard Brokerage Services.
Through a Vanguard mutual fund account.

Share pricing

Market price fluctuates throughout the trading day.
Priced once a day after financial markets close.

Transaction costs

No commissions for Vanguard Brokerage clients.* You'll incur a bid-ask spread on each purchase and sale. The bid-ask spread is built into market price.
No transaction costs when purchased or redeemed directly from Vanguard.**.

Trading flexibility

Trades processed any time during the trading day.
Transactions processed at the fund's next closing net asset value.

Automatic investing service

Trades processed any time during the trading day.
Move money from a bank, savings and loan, or credit union into your Vanguard funds or a schedule you choose. You can also automatically move money from Vanguard to your bank.

All investments are subject to risk.

* Trading limits, fund expenses, and minimum investments may apply. See the Vanguard Brokerage Services commission and fee schedules for full details.

** Some purchase and redemption fees may apply, depending on the fund and how long you've held the investment.

Past performance is no guarantee of future results.

You must buy and sell Vanguard ETF Shares through a broker like Vanguard Brokerage Services (we offer them commission-free) or through another broker (you may incur commissions). Vanguard ETFs are not redeemable directly with an applicant fund other than in creation unit aggregations. Like stocks, ETFs are subject to market volatility. When buying or selling an ETF, you'll pay or receive the current market price, which may be more or less than net asset value.

Vanguard provides its services to the Vanguard funds and ETFs at cost. More information about Vanguard funds and ETFs, including at-cost services, is available in the fund's prospectus.

Vanguard Brokerage Services is a division of Vanguard Marketing Corporation, member FINRA.

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