Vanguard's average fee is now 0.07% after biggest-ever cut (opens in new tab)

One other differentiation that Vanguard has is that it is owned by the fund holders

“Vanguard set out in 1975 under a radical ownership structure. Our company is owned by its funds, which in turn are owned by Vanguard’s fund shareholders. We focus on meeting the investment needs of our clients.”

So in short, vanguard is customer-owned, where fidelity is owned by mostly the founding family (the Johnson’s).

https://corporate.vanguard.com/content/corporatesite/us/en/c...

TBH, I trust vanguard more, even if their website is absolutely worse. There's a saying, 'if you're not the customer, you're the product'. I expect trades on those index funds are getting 'front run' much like robinhood is getting front run. You might have a lower ER but your nav might effectively be higher when buying and lower when selling.

Of course, I'm a 'buy and hold' investor so this doesn't really effect me much, but it's the principle of the matter.

I don't think vanguard's core customer base cares about what hungry competitors are doing to entice them to move. Just look at Robinhood: they offered the biggest financial incentive for users to switch of any broker in the industry and I doubt many vanguard customers took them up on that. Stability, trust, and low fees are all buy and hold investors at Vanguard really care about.

I have accounts at both, and my perception is that Vanguard is pretty much exclusively low cost, but Fidelity does have some very competitive options if you can find them. They just also have a lot of overpriced junk.

Fidelity’s technology and customer service does generally seem better. Although they were completely baffled when their app refused to run on a rooted phone with an error message along the lines of “your account is frozen” after I logged in. (It wasn’t, and worked fine after I realized that was the issue and put it on the deny list.)

Overall, I trust Vanguard more, but both have their strong points.

Matt Levine has a bit about the best customer service your broker can provide is not picking up the phone in a crisis.

Bad UX is, intentionally or not, consistent with Vanguard's long-term index investing philosophy. Call us? Use our website? Whatever it is you are trying to do, you probably shouldn't be doing that.

I kid, but only a little.

It’s hard to beat Fidelitys offer right now. They give you a 2-3% checking account. A 2% cash back credit card, access to their low cost funds and a decent enough website. All in one place.

Other brokerages are better at their niche but the fidelity package is quite competitive

Isn't this about the funds, rather than using Vanguard as a broker? Can't you buy Vanguard funds while on Fidelity, or vice versa?

We tried using vanguard. The UX/UI was so bad we went through the work of transferring everything to fidelity. They've got a pretty decent app.

Vanguard has so much friction on what should be very simple and common tasks.

There's no excuse for that. I can say pretty confidently that cutting fees won't be enough. They need a total rewrite of all their customer facing software and web stuff, and they probably need to revamp their customers service as well. They screwed up my wife's name and she tried for months and months to fix it before giving up.

RE: Fidelity Zero

The downside, as I understand it, is that Fidelity Zero doesn’t offer ETFs, and that the Fidelity Zero mutual funds can’t be transferred to other brokerages. Depending on your preferences their expense ratios might justify the vendor lock-in, but Vanguard ETFs are hard to beat IMO.

Fidelity's "Zero" funds are great, but only for specific scenarios IMO. They can't be held outside Fidelity accounts, so what happens if you get caught up in some KYC nonsense and Fidelity closes your account? Are you forced to liquidate and incur capital gains? There are also some embedded tax efficiencies inherent to ETFs, like 351 exchanges, which aren't popular now, but may become popular in the future. TBH, this mainly applies to taxable accounts. For nontaxable accounts, Zero funds don't have much downside.

I'm waiting for negative fee funds that delivers better than indexed returns by loaning out the shares to shorts.

I started using E-trade because of this instead of transferring my vested stock to Vanguard. Already had an account so it was zero effort to convert to my usual funds as ETFs which has the bonus of being transferable between brokerages unlike mutual funds.

Yeah, as a litmus test of how much they care about their customers try to call in and get something done.

Vanguard will throw you into an automated labyrinth with the only exit being a poorly-trained rep in india or pakistan that has no real understanding of what you're trying to do.

Their website is complete trash compared to the other big two. Often down, you can only check your balance, etc.

Fidelity will within a matter of a couple of minutes connect you with someone that seems too good to be true. Knowledgeable, friendly, going out of their way to help you, they follow up on what they say (like calling you back, etc).

Once I got a taste of how Fidelity treats people and their broader set of products I moved everything over.

Vanguard is circling the drain if you ask me.

It's really annoying that people here are talking about "Zero" fee funds as if they were zero-fee funds. As far as I can tell "Zero" means less than 0.05% fees.

FWIW, I’ve hd excellent customer service / support experiences with Vanguard - and the opposite with Fidelity.

and Vanguard keeps fading the crypto vote, and Fidelity is the exact opposite

everyone can vote with their wallet

For index funds, the important measure is the tracking difference [0] anyway. While the costs contribute to it, different ETFs on the same index differ in their typical/historic tracking differences beyond their differences in nominal cost.

[0] https://www.morningstar.com/business/insights/blog/funds/etf...

With 7% interest it’s over 200k.

At %0.07 you would lose about 2% of your total value after 30 years.[1] No thanks.

[1]https://www.bogleheads.org/wiki/How_much_do_you_lose_to_annu...

I agree that minute differences don't really matter. E.g., 0.09% vs 0.07%; who cares. Differences as large as 0.5% are much more material in the long term, though.

Agreed. I'm looking for non-financial features at this point. Vanguard supports FIDO hardware keys and Fidelity doesn't.

I'm not storing my retirement funds in the latter.

actively investing is 1) hard and 2) really just a waste of time considering the amounts most people are dealing with. I think it may have been from A Random Walk Down Wall Street but the general notion is something like this:

You have a 500k portfolio, and you spend the average amount week managing your portfolio (12 hours). If you were to achieve a 2% alpha (which is considered insanely high for any actively managed fund, and almost impossible to replicate year after year), you have made an excess $10k over what you would have made investing your portfolio in a benchmark.

On an hourly basis that's about $16 per hour spent... you could get more reliable income working at a gas station in California. And of course, most people are not investing $500k, the vast majority of day traders are probably pulling their hair out managing <$100k...

Indeed, that is about the stated revenue on their Wikipedia page. Divided equally among their 20,000 employees, that comes to $350,000 per employee. Expenses like office space, taxes, fines/fees, inflated executive compensation, etc will bring that down quite a bit; though other sources of income will bring it back up too. Sounds reasonable.

Interesting. That would put their budget higher than the bottom 10% of state budgets.

Indeed, that's the reason why they can afford to reduce the fees. Index managers are not charities after all.

Revenue, not income.

My broker doesn't show fee on some of the Vanguard instruments, but e.g. the S&P 500 UCITS ETF (USD) has 0.08 % listed as fee. Which ones are you looking at?

Vanguard FTSE Europe ETF (VGK) is only 0.06%

How do those compare to average expense ratios and fees in that market?

The full list is at the bottom of their press release: https://corporate.vanguard.com/content/corporatesite/us/en/c...

> they didn't list specific symbols though.

rule of journalism: never quote the original news/article source

rule of financial journalism: never list the ticker/wkn/isin that would make the article actually useful

Bonds kind of fell of my radar for a while. What are yields like now?

Which of these do you use personally?

Any imbalance should be easily exploitable by market players, so I would think it should be self-correcting.

Also, worldwide there are quite different preferences in which indexes to hold, so there is some variation.

It isn't possible to have an informed vote for the 500 companies in a S&P index fund and still have a life.

I probably have an informed opinion on the company I work for - but I don't have enough shares to matter. The other 499 I know nothing about.

Having voting rights kind of goes against the point of tracking an index though. Better invest in ESG funds or something like that. And for funds that use synthetic replication there is nothing to vote on in the first place.

That was the platform fees.

> VTI is too expensive compared to ITOT.

What? Both are 0.03% ER funds.

Agile is not something a small investor can win at. You can win by reading the 10k and such and then following what is happening in the real world and thus predict what will happen. You should be able to make a nice income doing this full time, but it won't be get rich, and probably won't be even tech levels. Note that I said full time. You will follow many companies and conclude the market is right and thus not do better, while what you need is the one where you can figure out in advance the company will do good/bad before the market does and thus buy/sell in advance.

Peter Lynch famously (he was then manager of the world's largest fund) got out of Gap when he noticed his daughters didn't buy anything there for school and that was his clue that they wouldn't do well next quarter. Gap as had ups and downs since. This is the type of research you will be doing all the time, trying to find a evidence of a company that will disappoint before anyone else knows. This is hard hard hard, and is always a matter of luck. Remember by the time it is public the large players already know and have acted (that is they get alerts the instant it becomes public and are first in line to act on it, technically you get the information at the same time and can act as fast but in practice you will not)

All the easy alpha has already been taken by high-frequency traders and big trading firms, and once all the easy alpha is gone, you're left more-or-less just tracking general market behavior... just like index funds.

Except being more agile also means eating more fees.

It should not come as a surprise. While it's a bit of a simplification, index funds are effectively a representation of the average surviving investor...that is among all investors, index funds are the average of those who have not yet gone broke. The investors who have gone broke get culled out.

So it should not at all be surprising that index funds perform better than the average investor.

Furthermore, as far as agility is concerned, it doesn't play much of a role in the market. Almost all gains in the stock market over the course of a year come from a handful of days. For example in 2024, just 9 days account for the entire yearly gains.

Does average investor here imply someone who's educated on the topic and knows what he's doing?

And you're also saying investor, not trader. So moving in and out quickly doesn't matter as much if we're talking about mid to long term holds.

It also makes sense that those with the largest edge in decision making for trades would collect most of the money.

Probably because no matter how agile you are, you'll never be more agile than the market. And being much slower isn't worse than being a little slower.

Thinking out loud here..

If the basic hypothesis is that “don’t bet against the U.S.” and that the U.S. long term, always go up, and I’m assuming most of us buy in to this hypothesis because most of us are probably holding an index fund for the S&P or QQQQ long term..

Looking at my portfolio, I just weathered the 2022-2023 storm without even looking. It could have been down 50%, it could have been 90%, I wasn’t selling. I’m all in for another 20 years.

Given that stance, why wouldn’t I just buy and hold a leveraged asset like TQQQ?

For plausible definitions of "average investor" in this context, it's arithmetically impossible: https://web.stanford.edu/~wfsharpe/art/active/active.htm

Some can. I have done well with leveraged tech funds.

I see several people complaining about this in this thread. Are you talking about their old interface or the new one they released a couple years ago? I find their new one to be decent. It's a little complicated sometimes, but I think it's hard to build a site that allows you to do so many things without being a little complicated.

The fees will be the same regardless of where you buy Vanguard funds.

I've detached this comment from https://news.ycombinator.com/item?id=42933291 so I could move the latter to the top :)

Vanguard funds are owned by the investors in those funds. The fees that they charge are to cover the expenses, not make profit for a private company. If they're doing so well that the fees are brining in more money than they need, they lower the fees so that their owners (the investors in the funds) don't have to pay as much in fees.

Their business is doing so well that they can lower fees.

cynically, crypto’s greatest achievement thus far has been speed running 200 years of financial mistakes and explaining why we need financial regulation.

There is a difference between investment and speculation and lots of people learn it the hard way, eventually.

They believe that cryptocurrency is not an investment vehicle, which I also believe (and I own a little). They have clearly stated that they invest in things with real-world value.

This is for the same reason they don't mix gold ETFs into their indexes. The point of their funds is to track companies that produce goods and services, not asserts and commodities.

And now I trust Vanguard just a little more.