Frequent trading policy

Important: this is a summary description of a Vanguard policy. It may not be complete, up to date, or interpreted accurately. Do not act on this description without confirming it yourself with Vanguard, first by reading the policy, currently posted on this Web page; second, by calling Vanguard to check. The policy is also spelled out in the Prospectus for every Vanguard fund.

Vanguard's frequent trading policy

Most or all mutual funds have policies that restrict frequent trading, but the details vary from company to company.

Forum visitors often ask about the policy, particularly if they have just sold fund shares and have noticed that their online account page is now showing the fund with a mark:


 * §This fund account is restricted according to frequent-trading policy guidelines.

Important points:


 * You should call Vanguard and talk to a representative if you have any questions about the policy. Vanguard reps get asked questions like this all the time. They are not going to chide you for asking.


 * "If you sell or exchange shares of a Vanguard fund, you will not be permitted to buy or exchange back into the same fund, in the same account, within 60 calendar days." The restriction only implies when you first sell, then buy. You can buy on one day and sell immediately on the next day.

If, for some reason, you wish to buy back into a fund after selling it, you do not need to wait 60 days. There are two easy ways to do it. Both introduce a short delay into the process of placing the order, and that is enough to make Vanguard happy.


 * Send the order in by mail. "this rule does not apply to: ... Transaction requests submitted by mail to Vanguard by shareholders who hold their accounts directly with us. Please note that transaction requests submitted by fax or wire are subject to the policy."


 * Set up a "one-shot" automatic purchase or exchange. Accounts held at Vanguard have a number of automatic options: automatic investment, automatic withdrawal, and automatic exchange. You set them up under "account profile." These account features are normally used for automatically recurring transactions, e.g. "exchange $500 from VTSMX into VBMFX on the 4th of every month," but you can set up starting and ending dates that result in only a single transaction occurring. The system does not let you schedule an automatic transaction for the next day, so this introduces a day or two delay, which is good enough.


 * There are no frequent trading limitations on ETFs.