The Wall Street Journal: Vanguard set to offer rivals funds for free as ETF fees approach zero

The Wall Street Journal: Vanguard set to offer rivals funds for free as ETF fees approach zero

Vanguard Group plans to eliminate online commissions on its rivals’ exchange-traded funds, a move by the asset management giant to lure new assets and steer more customers to financial advice.


Vanguard became the world’s second-largest money manager by offering some of the lowest-cost products in the industry. Rivals have increasingly tried to match or beat Vanguard on fees, pushing the cost of investing toward zero for some basic portfolios of stocks and bonds as firms duel for customers.


For years customers paid nothing to trade Vanguard’s own funds. In August the manager will extend that same arrangement to customers that want to buy or sell online nearly 1,800 other ETFs offered by such competitors as BlackRock Inc. BLK, -0.65% Charles Schwab Corp. SCHW, -0.33%   and State Street Global Advisors STT, -0.05% It will still charge commissions for phone trades of these rival ETFs.


The plan is the first significant pricing change at Vanguard under new Chief Executive Mortimer J. ‘Tim’ Buckley, who took the helm earlier this year. The larger strategy is to attract new brokerage clients to Vanguard and offer them other services like financial advice where Vanguard can collect additional revenue.


An expanded version of this article appears at WSJ.com


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