Where Should You Buy Vanguard Funds?

Know the Pros and Cons to the Options

Investment advisor discussing Vanguard Funds with clients
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If you’re looking to buy mutual funds, you’ve likely heard about Vanguard, the world's largest mutual fund company. Vanguard offers an outstanding roster of high-quality, low-cost mutual funds and exchange-traded funds (ETFs) free of commissions or sales charges (or "loads"). 

You have two options for buying Vanguard funds—from third-party brokerage houses such as TD Ameritrade or Charles Schwab or through Vanguard’s website directly.

If you already have an account at a third-party brokerage firm that offers Vanguard funds, buying them through your brokerage is the simplest option. However, third-party brokerages may add fees or restrictions associated with these purchases. Here’s how to decide.

Key Takeaways

  • The lowest-cost place to buy Vanguard funds is through Vanguard.
  • Other large brokers offer limited Vanguard funds, usually with fees added.
  • If you already have a broker, it's convenient to add Vanguard funds to your portfolio through them.

Where You Can Buy Vanguard Funds (Besides Vanguard)

Due to the popularity of Vanguard’s mutual funds and ETFs, some large brokerage firms now sell their index funds and ETFs in addition to their own. However, since those firms are also direct competitors of Vanguard, the number of Vanguard funds they offer is often limited. It’s also more expensive. For example, you can buy Vanguard’s flagship index fund, Vanguard 500 Index (VFIAX), through Fidelity, but you’ll pay a transaction fee to get it. Fidelity charges this fee because Fidelity 500 Index (FXAIX) is a competing fund with identical holdings. It’s not in Fidelity’s best interest to allow investors to easily buy competitors’ funds at no added cost or fee.

The largest brokerage with the greatest number of Vanguard funds available to investors is TD Ameritrade, which has complex commissions and varying fees on their Vanguard funds.

If you buy Vanguard funds from the firm directly, you won’t pay those additional costs. 

Pros and Cons of Buying Vanguard Funds through Other Brokerages

Buying Vanguard funds at other mutual fund companies or brokerage firms is the same as buying any mutual fund or ETF from a competing firm. Generally, the pros are centered around convenience, and the cons focus on fees.

Pros
  • Convenience: Buying from a single brokerage enables you to build your entire portfolio at one company.

  • Easier tracking: Minimizing the number of accounts you own makes it easier to track your holdings.

  • Diversification: Brokerage firms and fund companies have different strengths. For example, Vanguard is great at indexing but doesn't have many actively managed funds.

Cons
  • Cost: Paying a transaction fee every time you buy a mutual fund, or a commission every time you buy shares of an ETF, reduces your net return. It also defeats the primary purpose of buying Vanguard funds—low expenses!

  • Limited choice: While you may find Vanguard funds at other brokerage firms, it’s likely that they won’t offer all of Vanguard’s funds.

Bottom Line

If you want to build a portfolio consisting mainly of Vanguard mutual funds or ETFs, you’ll benefit from investing directly with Vanguard Investments. You’ll also have access to the full range of funds and ETFs that Vanguard offers, and you won’t have to pay additional fees.

Frequently Asked Questions (FAQs)

What are Vanguard index funds?

Vanguard's index funds are a type of passive investment product that tracks an index. These indexes can be broad, such as the S&P 500 or the Nasdaq. They can also be targeted to capture a specific type of investment, region, or some other goal along those lines. By passively tracking an index rather than actively making decisions about the investments, Vanguard's index funds typically have lower fees than active fund alternatives.

How long does it take to buy or sell Vanguard funds?

Vanguard fund trades, like all mutual fund trades, execute once per day after the market closes. Any trades placed within the previous trading window will execute as the fund's new net asset value (NAV) is calculated. There isn't a set time that this happens, but you can expect it to happen at some point in the afternoon or evening after the trading day. If someone places a sell order on Monday morning, for example, the sale should be complete by Tuesday morning.