The Vanguard Group is the grand daddy of low-cost indexed based mutual fund investing. Started in 1975 by Jack Bogle, he understood over 80% of actively managed funds did not beat the markets indices. His mantra, is you arent best to beat the market, you should become the market, and focus on low cost fees. The review of The Vanguard Group has been updated for 2013.

Vanguard has grown to become the world’s largest no load mutual fund company. While Vanguard is mostly known for its low-cost index funds, they also offer a variety of low-cost, actively managed mutual funds and exchange-traded funds (ETFs).

Vanguard also provides brokerage services, variable and fixed annuities, educational account services, financial planning, asset management, and trust services.

In the same spirit of shedding further insight on the different investment options available to consumers, today, I wanted to share with you my experiences with Vanguards investment services. Personally, I have been a Vanguard account holder since 1999. Overall, I have found Vanguard offers a wide selection of mutual funds and ETFs at a low cost, but their website to be somewhat outdated and clunky.

Account Options Offered At Vanguard

Currently, Vanguard offers the following account options. Beside each type of account, Ive included a brief summary of my experiences, where applicable.

• 401(k) rollovers to a Vanguard IRA This type of account enables you to transfer your 401(k) retirement account at your previous employer and convert it to a traditional IRA with Vanguard. I completed this process in with my wifes 403(b) with a former, and the process was executed without any failures or delays. And, better yet, there were no additional penalties/fees incurred by the process from Vanguard.
• Annuities Vanguard offers both fixed income and variable annuities. While I dont personally have one of these, I understand Vanguard has some of the lowest rates in the industry for annuities. This is mostly because they dont have full-time sales people selling their product and pass the discount onto you.
• Roth IRAs and Traditional IRAs Vanguard gives investors the option of opening either a Traditional (pre-tax contributions) or Roth (post-tax contributions) IRA. I have been using a Roth IRA from Vanguard for 3 years now, and I have found it a very effective investment vehicle with their low cost mutual funds.
• Individual (taxable) Accounts Lastly, Vanguard allows you to save money in taxable accounts in either stocks, bonds, CDs, or mutual funds.

Investment Types Offered

The Vanguard Group offers a very comprehensive array of investment options, regardless of the type of account you choose to open. This review focuses only on Vanguards bread-and-butter mutual funds and ETFs.

Vanguard Mutual Funds

• 121 total mutual funds including money market, international, balanced, bond, REIT, and stock mutual funds.
• Vanguard offers both actively (stock picking) and passively (tracking an index) managed mutual funds.
• Offers lower fee Admiral Shares mutual fund options. These shares generally require a balance in the mutual fund of at least $10,000. However, the expense ratio for these Admiral Shares is generally 30-50% lower than that of the normal mutual fund shares.

Vanguard ETFs

• In addition to mutual funds, Vanguard has also become a major player in the ETF markets, currently offering 52 different ETFs in the majority of the same areas that they offer mutual funds.
• Generally, ETFs have expense ratios

0.1% lower than the same asset class of mutual fund. While this is not a huge difference, it can add up over the years with larger account balances.

In most cases, especially if you have complete control over your investment account, you would want to choose the Vanguard ETFs over their mutual funds. Not only are most cheaper, but typically are more tax efficient.

Trading Fees and Commissions

Vanguard charges no commission for trading their mutual funds and ETFs. Purchasing stocks and non Vanguard ETFs through Vanguard can be expensive. This isnt surprising since their focus is on low cost mutual funds.

Stock and ETF Fee Schedule