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Vanguard to strip online ETF fees from rival offerings

Just when you thought fund fees couldn’t get any lower, Vanguard now plans to eliminate online commissions for a majority of its ETFs, including from its competitors’ products.

The firm said it will expand access to its line of low-cost ETFs to nearly 1,800 from 77, offering them at no cost, as well as from rivals like BlackRock, Schwab, and SSgA. Vanguard, which has offered commission-free transactions for ETFs since 2010, added that “highly speculative and complex ETFs” are excluded.

The changes are expected to affect a majority of ETFs traded on major exchanges by as early as August, Vanguard said.

Vanguard is cutting commissions for 15 mutual fund shares.
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“We’ve driven down the costs of funds. We’ve driven down the cost of advice. Now, we’re driving down the cost of investing in ETFs,” Karin Risi, managing director of Vanguard’s retail investor group, said in a statement.

Clients currently pay roughly $2 for online equity transactions, the firm said. Brokerage settlement accounts are distributed to the Vanguard Federal Money Market Fund (VMFXX), which at 1.82% yields five times the average market rate.

Vanguard ETFs currently house $937 billion in global assets under management.

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