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.
An ETF may be appropriate if you:
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).
Vanguard Brokerage clients trade our ETFs commission-free, another way you can receive more value for your investment.*
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.
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.
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.
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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