Are Vanguard ETFs Free at Schwab? The Complete Guide to ETF Fees in 2025

Breaking Down the Truth About Vanguard ETFs at Schwab

Hey there, fellow investors! I’ve spent countless hours researching ETF fees across different platforms, and one question keeps popping up in my inbox “Are Vanguard ETFs free to trade at Schwab?” Today, I’m gonna cut through the confusion and give you the straight facts about trading Vanguard ETFs at Charles Schwab in 2025.

The short answer? Yes, Vanguard ETFs are commission-free at Schwab when traded online. But there’s way more to the story if you wanna be a savvy investor. Let’s dive in!

The Real Deal on Commission-Free ETF Trading at Schwab

Good news for ETF fans! According to Schwab’s official site, they offer over 3,000 commission-free listed ETFs, and this includes Vanguard ETFs. This means when you buy or sell Vanguard ETFs online through your Schwab account, you won’t pay that pesky trade commission that used to be the norm years ago.

But hold up – “commission-free” doesn’t mean “completely free.” There are other costs associated with ETF investing that you should know about Let me break it down for ya

Understanding the True Cost of ETF Investing

When I first started investing, I thought “commission-free” meant I wouldn’t pay anything. Boy was I wrong! Here’s what you actually need to consider:

1. Operating Expense Ratio (OER)

This is the biggie that many new investors overlook. The OER is basically the annual fee that all ETFs charge to cover their operating costs. It’s expressed as a percentage of your investment.

For example, if you have $10,000 invested in an ETF with a 025% expense ratio, you’re paying about $25 per year in expenses This fee is deducted from the fund’s assets, so you don’t see it as a separate charge – but it definitely impacts your returns over time.

Industry averages for passively managed ETFs hover around 0.15% according to Schwab’s data, while Schwab’s own ETFs have an asset-weighted average OER of just 0.05% for their cap-weighted funds.

Vanguard ETFs are known for their low expense ratios too, which is one reason they’re so popular. But the exact OER varies from one Vanguard ETF to another, so always check the specific fund you’re interested in.

2. Bid/Ask Spread

This is another “hidden” cost that isn’t obvious when you’re trading. The bid/ask spread is the difference between:

• The bid price (highest price a buyer is willing to pay)
• The ask price (lowest price a seller is willing to accept)

For popular ETFs with high trading volume (like many Vanguard ETFs), this spread is usually tiny. But for ETFs with lower trading volume, the spread can be wider, which means you’re effectively paying more when you buy and getting less when you sell.

According to Schwab, if you plan to hold an ETF for less than a year, the bid/ask spread can actually matter more than the OER!

3. Other Potential Fees

While the basic online trades are commission-free, there are situations where you might still pay fees:

• Broker-assisted trades: If you place an ETF trade through a broker instead of online, you’ll pay $25 per trade at Schwab
• Automated phone trades: These will cost you $5 per trade
• Exchange process fees: These apply to sell transactions
• OTC ETFs: Unlisted ETFs are subject to commissions

Schwab vs. The Competition: How Do Their ETF Costs Compare?

I’ve done some digging, and Schwab positions itself as an industry leader in low-cost ETF investing. Their own passively managed ETFs have an asset-weighted average OER of 0.05%, which is significantly lower than the industry average of 0.15%.

But when it comes to trading third-party ETFs like Vanguard’s, the commission structure is pretty similar across major brokers these days. Most of the big players (Schwab, Fidelity, Vanguard, etc.) offer commission-free online trading for listed ETFs.

The real difference comes down to the other services, research tools, and overall platform experience each broker provides.

Tips for Minimizing Your ETF Costs at Schwab

Since I started investing with ETFs, I’ve learned a few tricks to keep costs low:

1. Always trade online – Avoid the $25 broker-assisted fee or $5 phone trade fee
2. Compare OERs before investing – Even small differences in expense ratios can add up over time
3. Consider holding period – For short-term holdings, pay attention to bid/ask spreads
4. Look at Schwab’s own ETFs – Their low 0.05% average OER is hard to beat
5. Avoid frequent trading – Even without commissions, other costs can eat into returns

Real-World Example: Cost Comparison of Vanguard vs. Schwab ETFs

Let me show you a practical example. Say you’re looking at two similar S&P 500 index ETFs:

• Vanguard S&P 500 ETF (VOO) with an expense ratio of 0.03%
• Schwab U.S. Large-Cap ETF (SCHX) with an expense ratio of 0.03%

If you invested $10,000 in either fund:

• Commission to buy: $0 at Schwab (online trade)
• Annual expense cost: $3 per year for either fund
• Impact over 10 years: About $30 in expenses for either (not counting fund performance)

In this case, the costs are virtually identical! Your decision might come down to other factors like tracking error, liquidity, or simply which fund fits better with your existing portfolio.

But What About Actively Managed ETFs?

It’s worth noting that actively managed ETFs generally have higher expense ratios than passive index ETFs, regardless of whether they’re from Vanguard or Schwab. According to Schwab’s site, “The OERs for actively managed funds vary from fund to fund, but are typically higher than passively managed funds.”

If you’re considering actively managed ETFs, be sure to factor in these higher ongoing costs when making your decision.

Special Considerations for Vanguard ETFs at Schwab

When trading Vanguard ETFs at Schwab, here are a few things I’ve learned to keep in mind:

1. Tax efficiency remains intact – You still get the tax advantages inherent to the ETF structure
2. Dividend reinvestment – Schwab offers dividend reinvestment for Vanguard ETFs
3. Research tools – You can use Schwab’s research tools to analyze Vanguard ETFs before investing
4. No account transfer fees – If you’re moving existing Vanguard ETFs to Schwab, there’s no transfer fee on Schwab’s end

The Bottom Line: Should You Buy Vanguard ETFs at Schwab?

If you already have a Schwab account, there’s little reason not to buy Vanguard ETFs there if they fit your investment strategy. You’ll get commission-free trading and all the convenience of managing your investments in one place.

However, if you’re specifically looking to build a portfolio entirely of Vanguard products, or if you want access to Vanguard’s mutual fund lineup at no transaction cost, you might consider opening an account directly with Vanguard instead.

For most investors though, the ability to trade Vanguard ETFs commission-free at Schwab offers great flexibility without additional costs.

My Personal Take

As someone who’s used multiple brokerages, I gotta say that Schwab’s platform makes it pretty easy to research and trade ETFs, including Vanguard’s offerings. Their research section gives you all the key info you need about expense ratios, bid/ask spreads, and historical performance.

One thing I’ve noticed is that while the commission-free aspect gets all the attention, it’s actually the ongoing expense ratio that makes the biggest difference to long-term investors. So when choosing between ETFs, I always pay close attention to that number.

Ready to Start Investing in ETFs?

If you’re convinced that ETFs are right for you, Schwab makes it easy to get started. You can:

• Open a new account if you don’t already have one
• Use their research tools to compare different ETFs (including Vanguard’s)
• Place commission-free trades online
• Get professional help by calling 866-855-7728 if you need guidance

Frequently Asked Questions

Q: Are ALL Vanguard ETFs commission-free at Schwab?
A: All U.S. exchange-listed Vanguard ETFs can be traded commission-free online at Schwab. However, OTC ETFs would still incur a commission.

Q: Do I pay more in hidden fees when buying Vanguard ETFs through Schwab instead of directly through Vanguard?
A: No, the expense ratio of each Vanguard ETF remains the same regardless of where you purchase it. That’s determined by Vanguard, not by Schwab.

Q: Can I automatically invest in Vanguard ETFs at Schwab on a regular schedule?
A: Schwab does offer automatic investment plans, but they’re typically for mutual funds rather than ETFs. For ETFs, you’d need to place each trade manually.

Q: Is there a minimum investment amount for buying Vanguard ETFs at Schwab?
A: You only need enough to buy at least one share of the ETF, plus any cash to cover potential price fluctuations between when you place the order and when it executes.

Q: What happens if Schwab changes their commission structure in the future?
A: Brokerages do occasionally change their fee structures. If this happens, Schwab will notify account holders of any changes that affect their investments.

Final Thoughts

Trading Vanguard ETFs at Schwab is indeed commission-free, making it a cost-effective option for investors who prefer Schwab’s platform but want access to Vanguard’s popular ETF lineup. Just remember that “commission-free” doesn’t mean there are no costs at all – always consider the operating expense ratio and bid/ask spreads when evaluating the true cost of any ETF investment.

Have you had experience trading Vanguard ETFs at Schwab? I’d love to hear about it! Drop a comment below or shoot me an email with your thoughts.

Happy investing!