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.
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 that way. Fidelity charges a 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 Vanguard funds. If you buy Vanguard funds from Vanguard 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 funds or ETFs from a competing firm. Generally, the pros are about convenience, and the cons focus on fees.
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.
