If you think of the Vanguard company, founded by John Bogle, you probably also think of index funds. Vanguard's S&P 500 Index Fund (FUND:VFINX) is the 800-pound gorilla of its sector. The company is also known for its low fees and for not paying brokerages commissions to sell its funds. With its focus on serving small investors and not ripping them off, it might not be a surprise that over the past decades, Vanguard and traditional full-service brokerage firms have not been the best of friends.

It's classic Fool stuff: We've long advised investors to take responsibility for their own finances, instead of leaving everything in the hands of conflicted "experts" who charge a lot and frequently deliver subpar results. We've pointed out that long-term investing in simple, low-cost index funds can serve you much better than jumping in and out of stocks rapidly on the advice of professionals, paying commissions and taxes all the while.

The scenario is changing a bit, though. Vanguard is pushing aggressively into somewhat new territory via its exchange-traded funds (ETFs). (Learn all about these part-fund, part-stock beasts, which might serve your portfolio well, in our ETF Center.) It's even sidling up to brokerages such as Morgan Stanley (NYSE:MWD), Wachovia (NYSE:WB), and UBS (NYSE:UBS). Perhaps even more interestingly, as a recent Philadelphia Inquirer article noted, these financial giants are interested in partnering with Vanguard. So what's going on?

Well, Vanguard is eager for brokerages to offer its line of ETFs to their customers -- and since they're bought and sold like stocks, brokerages will pocket their usual commission when customers buy or sell them. A chief Vanguard ETF is the Vanguard Total Stock Market VIPER (AMEX:VTI). It sports nearly $5 billion in assets, carries a measly expense ratio of 0.13%, and features a dividend yield around 1.65%. A huge competitor for Vanguard in this arena is Barclays (NYSE:BCS), which commands more than half of the entire ETF market. Barclays' ETF assets recently totaled $139 billion, vs. Vanguard's $8 billion.

(Want to get a feel for just how popular ETFs have become? Check out this statistic from the Inquirer: "Barclays' iShares series of ETFs took in $43.8 billion in new money last year, according to Financial Research Corp., of Boston. Vanguard's entire suite of index mutual funds took in only $33 billion.")

Meanwhile, brokerages are open to Vanguard's offerings now because they're trying to position themselves as financial advisors. In such roles, index funds are sensible investments to recommend.

This development is good news for investors. Let's wish Vanguard good luck as it expands.

By the way, if you're looking for some outstanding mutual funds, try our Motley Fool Champion Funds newsletter for free, and you'll see the 20-plus funds we've recommended so far. (Our newsletters have been pretty impressive so far -- see for yourself.)

Longtime Fool contributor Selena Maranjian does not own shares of any companies mentioned in this article.