Founded in 1975, Vanguard was established on the idea that a mutual fund should be owned by its investors. Vanguard hasn't shifted its focus much in the decades since its inception. While the company now offers an online platform that allows clients to buy and sell a greater variety of securities - including stocks and options - its primary services still emphasize long-term, passive investments, like mutual funds and ETFs. Vanguard scores a 3.2 out of 5 from Investopedia, due primarily to its bare-bones trading platform and singular focus on retirement investing. This middle-of-the-road rating reflects the fact that the usefulness of Vanguard's platform will depend on the investor's goals. It's not for the day trader, the charting guru, or the data junkie. However, for people looking to invest in solid, low-cost mutual funds and ETFs - or those with larger sums who'd like an advisor to do the legwork - Vanguard may be a perfect fit.
Vanguard is known for its affordable investment products, and many of its mutual funds and ETFs have expense ratios far below the industry average. That commitment to affordable investing, however, doesn't always extend to its brokerage fees. While Vanguard does offer commission-free trading for its own mutual funds and ETFs, as well as for some fixed-income securities, the standard commissions for other trades are among the highest. For active traders who are looking at more than Vanguard products, and who don't have the $1 million necessary to secure the 25 free trades that come with Flagship-level accounts, Vanguard's commission fees can significantly diminish returns. Vanguard's focus on affluent investors who don't trade regularly is made clear by its fee structure. In fact, Standard-level clients actually pay more per trade after the first 25. Vanguard's margin rates, by contrast, are almost a whole point lower than the industry average.
The Vanguard Total Stock Market Index fund is Vanguard's largest index fund, embodying founder John Bogle's core philosophy. The fund gives you exposure to the entire U.S. stock market with broad diversification among large-, mid- and small-cap companies on both sides of the growth and value spectrum. It's a passively managed fund, so its expenses are as low as they come at 0.17%. Because of its portfolio turnover, it is very tax-efficient, so it is a great fund for taxable accounts.
Bogle was among the first industry leaders to make a direct link between investment expenses and investment performance. He was also among the first to point out that the vast majority of actively managed funds cannot beat the market indexes with any degree of consistency. If you are a passive investor, you can't achieve broader portfolio diversification anywhere else.
The Vanguard brand is one of the most trusted and recognizable names in the industry, and what it may lack in platform agility, it makes up for in security. In addition to being a member of both FINRA and SIPC, Vanguard is a member of the National Business Coalition on E-Commerce and Privacy. Under the SIPC coverage, Vanguard customers are protected for up to $500,000 (including $250,000 for cash claims). In accordance with the SEC Customer Protection Rule, Vanguard also has additional coverage through Lloyd's of London and London Company Insurers.
In addition to Vanguard's insurance protection, every client is protected against fraud. There are several security features available on any account, including the option to require two-factor authentication when logging on. Users can elect to use a security key, receive individual time-sensitive security codes, answer security questions or all three. Clients who prefer to call in to speak with an advisor or representative can also sign up for Vanguard Voice Verification, which allows Vanguard's phone system to recognize a specified passphrase in the user's unique voice. Vanguard also uses TLS and encryption technology to keep customer data safe and secure on-site, and promises never to sell customer information to third parties. If, despite all these security features, you are still the victim of fraud, Vanguard will reimburse any funds taken from your account in an unauthorized transaction, provided you've taken reasonable steps to protect your account and information.
While Vanguard may pull out all the stops when it comes to security, its falls pretty short in terms of features. A few notable absences include the inability to: automate trading using predefined and customized rules or logarithms or choose how your orders are routed. In addition, Vanguard offers no advanced platform for more educated or active traders. Once again, Vanguard's product is not intended for the DIY day trader who wants all the bells and whistles. It is aimed largely at investors who prefer to have an advisor (robo or otherwise) take care of the heavy lifting but who occasionally want to check in on how a given stock or fund is doing without really diving into the data. There are, however, a few useful features that Vanguard does offer:
Where Vanguard shines is in its managed investment offerings. Either through all-in-one funds that allow investors to choose one product that takes care of the rebalancing itself, or through the Personal Advisor service, Vanguard is focused on clients who lack either the time or the interest to be actively involved in their investments. The site is light on special features but heavy on retirement-focused content and services. Vanguard knows its key demographic and isn't wasting money or time trying to compete with more agile platforms for a piece of the active-investor pie. While it does offer some actively managed funds, and its advisor services are tailored to the needs of each individual investor, passive long-term investing is the name of the game at Vanguard, and its platform's offerings reflect that.
Because of its lack of special features, Vanguard's trading platform may leave something to be desired. Unlike its competitors, Vanguard doesn't offer any downloadable desktop platforms or tools for more advanced traders. Its web-based platform is the most advanced product available. Its mobile platform is serviceable but not inspiring. An active trader will find this platform spare and slow. While the platform does allow you to buy and sell more than just mutual funds and ETFs, the minimal charting capabilities, lack of support for advanced trading strategies, and paltry selection of deep-dive research materials makes it clear that Vanguard's heart just isn't in active trading.
Vanguard's web-based platform does allow you to create up to six customized watchlists, and you can receive customized alerts via email or text. The charting features let you compare multiple ticker symbols and indices. You can also place trades after the market closes, between the hours of 4:15 p.m. and 6:30 p.m. EST, for no additional fees. In general, the web-based platform performs the basic functions of any trading platform. You can search for ticker symbols, pull up quotes, look at price history, read financial statements and market reports, and check in on relevant news and research.
Stock price information isn't always real time, and quote pages must be refreshed to get new prices. Charting capabilities are limited, with only nine technical indicators available and no way to plot more than one at a time. Charting is not robust: You can't save a chart layout or customize anything other than the chart type (candle, mountain, line, OHLC); trading volume isn't shown; you can add SMAs, EMAs, and Bollinger bands, as well as plot dividends, splits, and earnings reports, but that's the extent of the platform's indicator selection.
There's no option for simulated trading. Vanguard's platform also doesn't offer any kind of trading journal. You can view your past transactions under your account, but there is no way to make notes, save screen shots, or otherwise document personal or market conditions for later study. In order to place a trade, you may be required to execute a series of steps just to access the trade screen. There are a number of ways to get there, but entering through the Investing tab at the top of screen (and clicking through a few additional links) can result in an involuntary log-off.
Vanguard offers mobile apps for iOS, Android, and Kindle Fire, as well as having a mobile website. While the app would not be the ideal tool for entering new positions or liquidating current ones, it is absolutely serviceable in terms of checking on investment progress, verifying executed trades, viewing stock prices, and other general housekeeping. It is relatively user-friendly and even a little bit quicker than the web-based platform.
Getting to the trading screen is actually much easier in the app than on the site (where it can take three steps or more), and quotes in the trading screen are real-time. You can also access news and research, and narrow the results by topic, though not by keyword. The app has a good range of security features, including fingerprint verification. You can also deposit checks (either made out to you or to Vanguard) directly to your account using your phone's camera, which is a great feature. The app and mobile site both allow for customized alerts and watchlists, and the mobile site provides all the same charting capabilities as the desktop version.
While the mobile site technically has all the same capabilities as the desktop version, accessing them can be difficult. If you want to use stock screeners or other tools, the in-app mobile site will open another window in your mobile device's browser, and it may or may not load the page you're looking for. You may need to log in again in the new window; you'll also need to log back into the app if you want to use it again, since you've left the in-app mobile site. Transitioning from app to in-app site, and then back to app, can result in involuntary log-off, despite the little pop-up message saying you will remain logged on while on the site.
The Vanguard site provides a number of resources for account navigation and tech support, including how-to guides and a searchable FAQ section. Vanguard also offers multiple ways to get in touch if you can't find the information you need online, including by phone, mail, or through a secure message center. While there are dedicated phone numbers for different inquiry types, Vanguard only offers limited 24/7 support and it does not offer an online chat. TDD/TTY dedicated phone lines are available but require an unnecessary amount of energy to locate.
The secure message center can be accessed only by existing clients, and there is no online chat available for either existing or prospective clients. While phone lines are staffed only from 8 a.m. to 10 p.m., Monday through Friday (Eastern Time), existing clients have access to 24/7 automated assistance, though the phone number is only visible on the Contact page once you log out.
Vanguard's site provides all of the standard research and information resources you would expect of any online broker. While it's easy to find data on stock price history, company financials, dividend payouts, and market news, there isn't much in the way of data synthesis or education, which will be discussed later. Still, the site does offer a wide range of data resources.
If you're looking to invest in mutual funds, ETFs, or fixed-income securities, Vanguard's research tools should serve you well. All the screeners are relatively robust, even the stock screener, which makes them valuable tools for traders who know what they're looking for. The ticker profiles provide a good cross section of data on company financials, market and sector news, and analyst ratings.
While Vanguard's research tools can be useful, they aren't always easy to find. The stock screener can be accessed easily once you are on a ticker profile page (which, itself, requires a search and click), but it's difficult to find otherwise. In general, all screeners require that you click through a series of informational pages, burying them sometimes three or four layers deep. Entering the term "screener" in the search bar, or even specifying a particular screener, still doesn't result in a direct link. Instead, you must choose the information page, Finding Individual Stocks and Bonds, scroll to the bottom, and click Use Our Stock Screener.
If you'd like to access the mutual fund screener or the fixed-income trade desk, you must select Use Our Tools to Search for Investments, and then choose the relevant screener from the new page. If you know exactly what you're looking for and how to find it, the search function is somewhat helpful. Otherwise, it's often quicker just to enter the relevant search terms and the word "Vanguard" into your browser's search engine and let it take you where you want to go.
The river of Vanguard's educational offerings is narrow, but deep. If you're looking at mutual funds or ETFs, Vanguard provides a wide range of products, news, and opinion on the pros and cons of different types of funds. If you're trying to decide between funds and ETFs, there's a similarly broad range of educational resources that explain how each product works, what it costs, and what kind of investor it might be best for. You'll also find solid retirement investing advice and information about 529 college savings plans on both the main site and blog. But educational resources on other aspects of investing - such as how to use and interpret technical indicators, financial statements, and charting data - are sorely lacking. Once again, Vanguard's major focus on retirement investors, and those who will enlist its advisor services, means that the site doesn't cater to more active traders, or even to new traders wanting to learn more about stocks, options, or analysis.
There's a decent amount of information on the Vanguard site but, again, those useful resources aren't always easy to access, and the search function is not particularly helpful. For example, Vanguard does allow investors to purchase IPO shares, but a search for "IPO" or "initial public offering" brings up nothing that is immediately relevant. You have to click on the Stock Trading-Basic Information page to learn anything about the topic. Other securities that Vanguard doesn't support, or features the site doesn't offer, don't come up in search results at all. For example, the term "FOREX" fails to retrieve any relevant results. Similarly, the platform does allow RSI charting, but neither "RSI" nor "relative strength index" - or even "relative strength indicator," as it's called on the platform - retrieve relevant search results. What's more, none of these terms is included in the Glossary.
Vanguard is an investment company, not a bank. As such, it doesn't offer typical banking products, such as standard checking or savings accounts. That said, it does provide some services that are similar to a bank for clients with Voyager Select and Flagship-level accounts.
Vanguard's focus isn't on banking, or on trying to dominate markets outside of its core demographic. It doesn't offer any kind of free banking services, as many competitors do, nor does it provide mortgage or other loan services. Its core offerings are mutual funds and ETFs, along with advisory services, and it doesn't try to entice additional customers through credit card offers or other flashy products. Vanguard knows what it does well and sticks to that.