If you think Vanguard is just about index funds, think again. Our active investments have consistently earned recognition for outstanding performance, including the Vanguard active fund family’s recent top rankings in Barron’s Best Fund Families of 2020.
Barron’s year-over-year recognition for Vanguard’s active mutual funds reflects our commitment to seeking long-term investment outperformance.
Vanguard’s active advantage
Consider the array of potential benefits you’ll get with Vanguard active investments:
Active investing has been a part of Vanguard’s DNA since our founding in 1975. Active investments represent about 30% of our total assets under management—approximately $1.7 trillion.*
Low costs can help you hold on to more of your investment returns. Our active funds have an advantage over those of our competitors, with an asset-weighted expense ratio of just 0.18%, compared with 0.62% for all other active funds in the industry.**
We use both internal managers and external partners, taking the time to identify highly skilled external portfolio managers. Thanks to our teams’ expertise, 86% of Vanguard’s active funds beat their 10-year Lipper peer-group averages.†
How Barron’s ranked the fund families
This description from Barron’s Best Fund Families of 2020 provides more detail on how Barron’s calculates its rankings:
- All mutual funds and ETFs (exchange-traded funds) are required to report their returns (to regulators as well as in advertising and marketing material) after fees are deducted, to better reflect what investors would actually experience. But our aim is to measure manager skill, independent of expenses beyond annual management fees. That’s why we calculate returns before any 12b-1 fees are deducted. Similarly, fund loads, or sales charges, aren’t included in our calculation of returns.
- Each fund’s performance is measured against all of the other funds in its Refinitiv Lipper category, with a percentile ranking of 100 being the highest and 1 the lowest. This result is then weighted by asset size, relative to the fund family’s other assets in its general classification. If a family’s biggest funds do well, that boosts its overall ranking; poor performance in its biggest funds hurts a firm’s ranking.
- To be included in the ranking, a firm must have at least 3 funds in the general equity category, 1 world equity, 1 mixed equity (such as a balanced or target-date fund), 2 taxable bond funds, and 1 national tax-exempt bond fund.
- Single-sector and country equity funds are factored into the rankings as general equity. We exclude all passive index funds, including pure index, enhanced index, and index-based, but include actively managed ETFs and so-called smart-beta ETFs, which are passively managed but created from active strategies.
- Finally, the score is multiplied by the weighting of its general classification, as determined by the entire Lipper universe of funds. The category weightings for the 1-year results in 2020 were general equity, 35.6%; mixed asset, 20.7%; world equity, 17.3%; taxable bond, 21.9%; and tax-exempt bond, 4.8%.
- The category weightings for the 5-year results were general equity, 36.2%; mixed asset, 20.9%; world equity, 16.9%; taxable bond, 21.6%; and tax-exempt bond, 4.4%. For the 10-year list, they were general equity, 37.5%; mixed asset, 19.5%; world equity, 17.3%; taxable bond, 20.8%; and tax-exempt bond, 4.8%.
- The scoring: Say a fund in the general U.S. equity category has $500 million in assets, accounting for half of the firm’s assets in that category, and its performance lands it in the 75th percentile for the category. The first calculation would be 75 times 0.5, which comes to 37.5. That score is then multiplied by 35.6%, general equity’s overall weighting in Lipper’s universe. So it would be 37.5 times 0.356, which equals 13.35. Similar calculations are done for each fund in our study. Then the numbers are added for each category and overall. The shop with the highest total score wins. The same process is repeated to determine the 5- and 10-year rankings.
When you invest in Vanguard actively managed funds, you’ll get the experience of top money managers from Vanguard and around the world.
*Vanguard, as of December 31, 2020.
**Industry average excludes Vanguard. Sources: Vanguard and Morningstar, Inc., as of December 31, 2020.
†For the 10-year period ended December 31, 2020, 7 of 7 Vanguard money market funds, 38 of 44 Vanguard bond funds, 6 of 6 Vanguard balanced funds, and 30 of 37 Vanguard stock funds—for a total of 81 of 94 Vanguard funds—outperformed their Lipper peer-group averages. Results will vary for other time periods. Only actively managed funds 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
For more information about Vanguard funds, visit vanguard.com to obtain a prospectus or, if available, a summary prospectus. Investment objectives, risks, charges, expenses, and other important information are contained in the prospectus; read and consider it carefully before investing.
All investing is subject to risk, including the possible loss of the money you invest. Diversification does not ensure a profit or protect against a loss. Investments in bonds are subject to interest rate, credit, and inflation risk.
Past performance is no guarantee of future returns.
Percentages may not equal 100% because of rounding."Topping Barron’s active fund charts once again",