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Vanguard Lures Investors With Commission-Free Trading of Rival ETFs

The asset manager, which oversees $5.1 trillion, keeps cutting costs to win over investors.

Vanguard Group is making it cheaper for investors to trade using exchange-traded funds offered by the firm and its competitors. 

The asset manager, which is known for its low-cost index funds, announced Monday that it will provide commission-free investing online for nearly 1,800 ETFs, including those created by BlackRock, State Street Corp., and Charles Schwab. Customers may begin trading without commissions as soon as August, according to the statement.

This is the latest move by Vanguard, which had $5.1 trillion in global assets under management at the end of May, to cut costs for investors as the firm seeks to win more business.

“Vanguard has led the industry in reducing the cost and complexity of investing for all investors for more than four decades,” said Karin Risi, the managing director of Vanguard’s retail investor group, in the statement. “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.”

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Last week, Vanguard announced that it was creating two ETFs that use environmental, social and governance screens. The firm estimates that the expense ratio for the Vanguard ESG U.S. Stock ETF will be 12 basis points, while the Vanguard ESG International Stock ETF will charge 15 basis points.

The indexes that the new ETFs will track exclude companies that offer adult entertainment, alcohol, tobacco, weapons, fossil fuels, gambling, and nuclear power, Vanguard said. They also screen for “certain diversity criteria as well as labor, human rights, anti-corruption and environmental standards defined by the U.N. global compact principles,” according to the announcement. 

“The adoption of ESG investing has accelerated in recent years, and more investors are looking for opportunities to align their investment choices with their values,” said Jon Cleborne, head of Vanguard’s portfolio review group, in the firm's statement last week.

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