Although Vanguard offers a variety of products, our index funds hold a special place in the hearts of many investors.
Fans of our funds proudly sport T-shirts and drink coffee from mugs with ticker symbols on them. Our crew are often humbled by the praise our funds get online and in real life.
What inspires so many people to invest with us, and pay us the ultimate compliment … recommending our index funds to their family and friends?
We’ve heard from investors, and there seem to be 3 key reasons (in addition to the fact that VTSAX coffee mugs are pretty cool):
Trust: We offered low-cost products when we didn’t have to
Standing up for the everyday investor is a theme Vanguard was founded on. Lowering the cost of investing has always been in our DNA. It’s not just a response to market pressure.
As the company has grown, our scale has allowed us to continue lowering fees. And we’re not stopping now. We’ll continue to lower costs and give those savings to investors.
Over the past 7 years, we’ve saved index investors an estimated $715 million based on total assets under management.* That adds up to a lot of funding for retirements, college educations, and weddings.
Performance vs. peers: Consistent long-term results
Let’s be honest. People invest for returns, and Vanguard index funds have delivered consistent long-term results. In fact, 84% of our index mutual funds and ETFs (exchange-traded funds) performed better than their peer-group averages over the last 10 years.**
No one knows what the markets will bring in the future, and high returns aren’t guaranteed, even over time. But with over 40 years of experience managing index funds, Vanguard’s management team does a lot behind the scenes to boost your chances of investing success.
Here are 2 ways Vanguard stays ahead of the competition:
- Using our expertise to impact performance. We use our experience, market relationships, and understanding of index methodologies to impact performance and make up for some or all of the cost of managing a fund. For example, the way we execute certain corporate actions (e.g., mergers, secondaries, IPOs) may result in modest outperformance of a relevant benchmark.
- Keeping costs as low as possible. Low costs are a key advantage of all index funds. Vanguard capitalizes on this advantage. The average expense ratio for Vanguard index mutual funds and ETFs is 73% less than the industry average.†
Ownership: Our unique structure puts investors first
Vanguard is client-owned. Vanguard fund shareholders own the funds which own Vanguard. This is unique because typical investment management companies are owned by outside stockholders.
At Vanguard, there are no outside owners and therefore no conflicting loyalties. Investors can benefit from the result: stability, transparency, long-term perspective, rigorous risk management, low costs, and a bedrock commitment to their interests.
Our fans are everywhere
While most Vanguard clients invest quietly, many want to share their enthusiasm. If you get stuck in traffic behind a car with a bumper sticker that says, “I heart Vanguard index funds,” you’re probably driving behind one of our loyal investors.
*Cumulative figure for all share classes from the 2012 calendar year through the 2018 calendar year for Vanguard’s U.S.–domiciled index mutual funds and ETFs. Estimated savings is the difference between prior and current expense ratios multiplied by average assets under management (AUM). Average AUM is based on month-end assets, which are then averaged over the 12 months of the calendar year. Ending assets are as of December 31, 2018.
**For the 10-year period ended December 31, 2018, 9 of 16 Vanguard bond index funds, 14 of 17 Vanguard balanced index funds, and 94 of 106 Vanguard stock index funds—for a total of 117 of 139 Vanguard index funds—outperformed their Lipper peer-group averages. Results will vary for other time periods. Only index mutual funds and ETFs with a minimum 10-year history were included in the comparison. Source: Lipper, a Thomson Reuters Company. The competitive performance data shown represent past performance, which is not a guarantee of future results. View fund performance
†Vanguard average expense ratio: 0.07%. Industry average expense ratio: 0.26%. All averages are for index mutual funds and ETFs and are asset-weighted. Industry average excludes Vanguard. Sources: Vanguard and Morningstar, Inc., as of December 31, 2018.
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