Good Mutual funds/best money funds
Written: Jul 01 '02 (Updated Jun 01 '05)
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Pros: Best Money Funds make easier to keep idle funds working. Low cost mutual funds
Cons: Stock trading (thru 3rd party) an afterthought
The Bottom Line: Would recommend for someone keeping high cash(money fund) and mutual fund balances. OK, but less favorable than E*Trade for bond buyers buying under 50 bonds/transaction
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| zver1's Full Review: Vanguard Brokerage Services |
Cash Balances-Money fund
Most investors ignor the low earnings on uninvested cash in a brokerage account. These are either in a captive money fund with excessive fees wiping out most of the return or cash interest at a very low rate. For very high net worth customers, the cash balance option also exposes cash balances to the credit risk of the broker(not covered by SPIC insurance). The lost interest can greatly exceed the commission savings from going with a low commission broker for people who do not trade actively.
Mutual Funds
The main advantage of Vanguard is that idle funds are in low fee Vanguard money funds. The website is first a mutual fund site with stock trading an afterthought. While, I generally avoid mutual funds, Vanguard is the most pro-investor mutual fund company. The funds own the management company so there is no gouging of mutual fund investors with excessive management and marketing fees. The low cost translates to better returns, particularly among bond funds and index funds where there is little opportunity for improvement by star investment pickers. This is not a company likely to be caught up in any trading scandal. Its focus is protecting the investor, not generating excessive fees for the management company.
Bonds
Good selection of bonds(bondsonline inventory same as used by many online brokers) but trading requires phone calls--no online trading. Charging a separate commission(as opposed to buiding markup into the price) benefits larger transactions since commissions do not go up as quickly with order size as with percentage markup of brokers such as Etrade. Etrade is recent years has really cranked up its markup on bonds so Vanguard is now much better for most trades. It is also more transparent since you are not negotiating against your broker.
Commissions
Commissions OK, but not the lowest. Commissions discounted for high balance customers. Stock trading through third party-nothing special, but competent.
Navigating Website
Navigating through the site is geared more toward mutual funds than stocks. The focus on funds is very apparent in that most menu options seem to apply to researching/buying/exchanging funds not stocks.
Stock/Option Execution
Execution is through Pershing(clearing broker) which is good (In my experience always better or equal to Schwab at getting best execution price). Can access stocks on pink sheets which some websites cann't find.
Recommended:
Yes
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Epinions.com ID:
zver1
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Reviews written: 8
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