Where Should You Buy Vanguard Funds?

Know the Pros and Cons to the Options

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If you’re looking to buy mutual funds, you’ve likely heard about Vanguard, the largest mutual fund company in the world. They offer an outstanding roster of high-quality, low-cost mutual funds and exchange-traded funds (ETFs) that are free of commissions or sales charges (aka loads). 

There are 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, then buying them through your brokerage is the simplest option. But third-party brokerages may add fees or restrictions associated with these purchases. Here’s how to decide.

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), at Fidelity but you’ll pay a transaction fee to get it. This is 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. However, TD Ameritrade charges transaction fees up to $49.99 for 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 at Other Brokerages

The pros and cons of buying Vanguard funds at other mutual fund companies or brokerage firms are the same as buying any mutual fund or ETF from a competing firm. Generally, the pros are centered around convenience, and the cons are centered around 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 they don’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. You’re also defeating the primary purpose of buying Vanguard funds—low expenses!

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

Bottom Line

If you want to build a portfolio consisting mostly of Vanguard mutual funds or ETFs, you’ll get the most benefit by 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. 


The Balance does not provide tax, investment, or financial services and advice. The information is being presented without consideration of the investment objectives, risk tolerance, or financial circumstances of any specific investor and might not be suitable for all investors. Past performance is not indicative of future results. Investing involves risk including the possible loss of principal. 

Article Sources

  1. Fidelity.com: Vanguard 500 Index Fund Admiral Shares

    https://fundresearch.fidelity.com/mutual-funds/summary/922908710

  2. TD Ameritrade: Pricing page https://www.tdameritrade.com/pricing.page