Buying and selling mutual funds—ours and theirs
Points to know
- You can buy our mutual funds through a Vanguard Brokerage Account or a Vanguard account that holds only Vanguard mutual funds.
- You must have a Vanguard Brokerage Account to buy funds from other companies.
- To avoid buying the dividend and getting a tax surprise, you should check the capital gains and dividend distribution dates before buying mutual funds.
A type of investment that pools shareholder money and invests it in a variety of securities. Each investor owns shares of the fund and can buy or sell these shares at any time. Mutual funds are typically more diversified, low-cost, and convenient than investing in individual securities, and they're professionally managed.
Investing in Vanguard mutual funds
Buying and selling Vanguard mutual funds is simple, whether you're transacting in a Vanguard Brokerage Account or in an account that holds only Vanguard mutual funds.
Here are details on fund prices, investment costs, and how to buy and sell.
Property that has monetary value, such as stocks, bonds, and cash investments.
Regular trading hours
Regular trading hours on the New York Stock Exchange (NYSE) and most exchanges are Monday through Friday, 9:30 a.m. to 4 p.m., Eastern time. (The exchanges close early before some holidays.)
After regular hours end, an extended-hour session (4:15 p.m. to 6:30 p.m., Eastern time) is available to place limit orders. An order placed during the extended session is automatically canceled at the end of the session if it doesn't execute.
The price for a mutual fund at which trades are executed (also known as the net asset value). It's calculated at the end of each business day.
The profit you get from investing money. Over time, this profit is based mainly on the amount of risk associated with the investment. So, for example, less-risky investments like certificates of deposit (CDs) or savings accounts generally earn a low rate of return, and higher-risk investments like stocks generally earn a higher rate of return.
The annual operating expenses of a mutual fund or ETF (exchange-traded fund), expressed as a percentage of the fund's average net assets. It's calculated annually and removed from the fund's earnings before they're distributed to investors, directly reducing investors' returns. For example, if you had $10,000 invested in a fund with an expense ratio of 0.20%, you'd pay about $20 a year out of your investment returns.
A sales fee charged on the purchase or sale of some mutual fund shares. The load may be called a charge or commission. The fee may be a onetime charge when you buy fund shares (front-end load), or when you sell fund shares (back-end load), or it may be an annual 12b-1 fee charged for marketing and distribution activities.
Each business day, by law, mutual funds determine the price of their shares.
They do this by taking the current value of all a fund's assets, subtracting the liabilities, and dividing the result by the total number of outstanding shares.
A fund's share price is known as the net asset value (NAV).
If we receive your request to buy or sell a fund before the close of regular trading hours on the New York Stock Exchange (usually 4 p.m., Eastern time), your transaction will receive that day's closing price.
If we receive your request after the market closes, your transaction will receive the next business day's closing price.
Vanguard mutual funds strive to hold down your investing costs so you keep more of your returns. The funds offer:
- Expense ratios below the industry average.*
- An option for electronic delivery of account documents so you pay no account service fees.
- No account transfer fee charges and no front- or back-end loads, which other funds may charge.
View Vanguard mutual fund fees & minimums at a glance
You can buy or sell our mutual funds through your Vanguard Brokerage Account or your Vanguard mutual fund-only account.
Find out what you can expect from Vanguard mutual funds
If you buy or sell via a bank transfer, your bank account should be debited or credited within 2 business days.
Investing in mutual funds from other companies
You can add mutual funds from many other companies to your portfolio and enjoy the same quality and breadth of service that you get with your Vanguard investments.
Here are details on fund prices, investment costs, and how to buy and sell.
No-transaction fee (NTF) fund
A no-transaction-fee (NTF) fund is exactly that—a fund that charges no fees when it's bought or sold. Vanguard Brokerage, however, imposes an NTF redemption fee on shares held less than a specified period. For more information, see the Vanguard Brokerage Services® commission and fee schedules.
The NTF redemption fee is in addition to any short-term redemption fees charged by the fund family. View a fund's prospectus for information on redemption fees.
A fund that charges a fee to buy or sell shares.
This holds the money you use to buy securities, as well as the proceeds whenever you sell.
Like Vanguard mutual funds, orders for other companies' mutual funds execute at that business day's closing price as long as they're received before the cutoff time.
Unlike Vanguard mutual funds, the cutoff for other companies' funds varies by fund. You can find the cutoff time by clicking the fund's name as you place a trade. Orders received after this deadline will execute at the following business day's closing.
Vanguard Brokerage offers a variety of funds from other companies with no transaction fees (NTFs). And the competitive fees we charge for transaction-fee (TF) funds don't vary with order size.
Get to know your investment costs
Don't let high costs eat away your returns
All funds bought and sold from other companies settle through your settlement fund. Before you transact, find out how the settlement fund works.
Generally, investing in other companies' funds is similar to investing in Vanguard mutual funds except that you must have a Vanguard Brokerage Account.
If you need to open a brokerage account, it's easy to do so online.
Open a brokerage account online
Here are some best practices for investing in mutual funds.
The difference between the sale price of an asset (such as a mutual fund, stock, or bond) and the original cost of the asset. A capital gain/loss is "unrealized" until the investment is sold, when it becomes a realized gain/loss. Realized gains are taxable and they may be considered short-term (if the investment was owned one year or less) or long-term (if the investment was owned for more than one year).
The distribution of the interest or income produced by a mutual fund's holdings to the fund's shareholders, or a payment of cash or stock from a company's earnings to each stockholder. Dividends can be distributed monthly, quarterly, semiannually, or annually.
Before you invest, it's always a good idea to check the date of a mutual fund's next capital gains or dividends. If the payout is near, you may want to hold off investing to avoid "buying the dividend."
Some investors try to profit from strategies involving frequent trading of mutual fund shares, such as market-timing.
They buy in and out of a fund excessively, which can disrupt the fund's management and result in higher costs borne by all of a fund's shareholders.
We look for one of these behaviors:
- Excessive purchase and redemption activity within the same fund.
- Excessive exchange activity between 2 or more funds within a short time frame.
Vanguard Brokerage and the fund families whose funds can be traded through Vanguard Brokerage place certain limits on frequent transactions and reserve the right to decline a transaction if it appears you're engaging in frequent trading or market-timing.
Vanguard funds may also impose purchase and redemption fees to help manage the flow of investment money.
An investment strategy based on predicting market trends. The goal is to anticipate trends, buying before the market goes up and selling before the market goes down.
Excessive exchange activity
Exchange activity is considered excessive when:
- It exceeds 2 substantive exchanges less than 30 days apart during any 12-month period.
- There's rapid movement into and out of several funds in clear violation of the suggested holding periods specified in the funds' prospectuses.
Exchange activity into and out of funds without a suggested holding period is assessed on a case-by-case basis.
Purchase & redemption fees
Some funds charge a fee when you buy shares to offset the cost of certain securities. Some funds charge a fee when you sell fund shares, or when you buy or sell shares within a specific time period. These restrictions are an effort to discourage short-term trading.
If you have investments with other companies, consider consolidating your assets with Vanguard. You'll make one phone call, receive one comprehensive statement, and log in to one website to manage and transact on your accounts.
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GOOD TO KNOW!
All brokerage trades settle through your settlement fund.
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For more information about Vanguard mutual funds and ETFs, visit Vanguard mutual fund prospectuses or Vanguard ETF prospectuses to obtain a prospectus or, if available, a summary prospectus. Investment objectives, risks, charges, expenses, and other important information are contained in the prospectus; read and consider it carefully before investing.
*Vanguard average mutual fund expense ratio: 0.10%. Industry average mutual fund expense ratio: 0.55%. All averages are asset-weighted. Industry average excludes Vanguard. Sources: Vanguard and Morningstar, Inc., as of December 31, 2021.
All investing is subject to risk, including the possible loss of the money you invest.
Vanguard ETF Shares are not redeemable with the issuing Fund other than in very large aggregations worth millions of dollars. Instead, investors must buy and sell Vanguard ETF Shares in the secondary market and hold those shares in a brokerage account. In doing so, the investor may incur brokerage commissions and may pay more than net asset value when buying and receive less than net asset value when selling.
Vanguard's advice services are provided by Vanguard Advisers, Inc. ("VAI"), a registered investment advisor, or by Vanguard National Trust Company ("VNTC"), a federally chartered, limited-purpose trust company.
The services provided to clients will vary based upon the service selected, including management, fees, eligibility, and access to an advisor. Find VAI's Form CRS and each program's advisory brochure here for an overview.
VAI and VNTC are subsidiaries of The Vanguard Group, Inc., and affiliates of Vanguard Marketing Corporation. Neither VAI, VNTC, nor its affiliates guarantee profits or protection from losses.