[Vanguard Is Growing Faster Than Everybody Else Combined]

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Taylor Larimore
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[Vanguard Is Growing Faster Than Everybody Else Combined]

Post by Taylor Larimore »

Bogleheads:

Morningstar is featuring an article about the spectacular increase in Vanguard mutual funds assets--particularly total market index funds (investors are catching on).

For Vanguard, Every Year is a Record

Best wishes.
Taylor
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kd2008
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NYT article on Vanguard

Post by kd2008 »

[Thread merged into here, see below. --admin LadyGeek]

https://www.nytimes.com/2017/04/14/busi ... rowth.html
In the last three calendar years, investors sank $823 billion into Vanguard funds, the company says. The scale of that inflow becomes clear when it is compared with the rest of the mutual fund industry — more than 4,000 firms in total. All of them combined took in just a net $97 billion during that period, Morningstar data shows. Vanguard, in other words, scooped up about 8.5 times as much money as all of its competitors.
This comes on the heels of the articles stating $2 billion dollars a day intake for this year for Vanguard.

I am glad that the general public at large is ultimately benefiting from lower investing costs - not just Vanguard fund investors.

I had a run in with Vanguard when they made numerous errors in opening an account of my family member. But strikingly enough they did call back and resolve it correctly. That is all I ask. Mistakes happen. It is prompt resolution that matters.
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Re: NYT article on Vanguard

Post by Jacotus »

Nice article. A good reminder of who brought us to this golden age.
In the last three calendar years, investors sank $823 billion into Vanguard funds, the company says. The scale of that inflow becomes clear when it is compared with the rest of the mutual fund industry — more than 4,000 firms in total. All of them combined took in just a net $97 billion during that period, Morningstar data shows. Vanguard, in other words, scooped up about 8.5 times as much money as all of its competitors.
That's an extremely misleading comparison from the author. They are quoting inflows to Vanguard, but lumping inflows to Fidelity with outflows from other mutual fund companies. I'm pretty sure Fidelity takes in a lot of money too.

A more meaningful comparison would be inflows to Vanguard with inflows to Fidelity, or with the combined inflows to all the inflow-positive mutual fund companies.
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Re: NYT article on Vanguard

Post by willthrill81 »

Jacotus wrote:Nice article. A good reminder of who brought us to this golden age.
In the last three calendar years, investors sank $823 billion into Vanguard funds, the company says. The scale of that inflow becomes clear when it is compared with the rest of the mutual fund industry — more than 4,000 firms in total. All of them combined took in just a net $97 billion during that period, Morningstar data shows. Vanguard, in other words, scooped up about 8.5 times as much money as all of its competitors.
That's an extremely misleading comparison from the author. They are quoting inflows to Vanguard, but lumping inflows to Fidelity with outflows from other mutual fund companies. I'm pretty sure Fidelity takes in a lot of money too.

A more meaningful comparison would be inflows to Vanguard with inflows to Fidelity, or with the combined inflows to all the inflow-positive mutual fund companies.
Vanguard is taking in substantially more money than everyone else COMBINED.
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Re: NYT article on Vanguard

Post by MotoTrojan »

willthrill81 wrote:
Jacotus wrote:Nice article. A good reminder of who brought us to this golden age.
In the last three calendar years, investors sank $823 billion into Vanguard funds, the company says. The scale of that inflow becomes clear when it is compared with the rest of the mutual fund industry — more than 4,000 firms in total. All of them combined took in just a net $97 billion during that period, Morningstar data shows. Vanguard, in other words, scooped up about 8.5 times as much money as all of its competitors.
That's an extremely misleading comparison from the author. They are quoting inflows to Vanguard, but lumping inflows to Fidelity with outflows from other mutual fund companies. I'm pretty sure Fidelity takes in a lot of money too.

A more meaningful comparison would be inflows to Vanguard with inflows to Fidelity, or with the combined inflows to all the inflow-positive mutual fund companies.
Vanguard is taking in substantially more money than everyone else COMBINED.
Net; means they're counting all the active fund money that was pulled out, which is significant. This isn't a 1-1 inflow comparison.
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Re: NYT article on Vanguard

Post by triceratop »

MotoTrojan wrote:
willthrill81 wrote:
Jacotus wrote:Nice article. A good reminder of who brought us to this golden age.
In the last three calendar years, investors sank $823 billion into Vanguard funds, the company says. The scale of that inflow becomes clear when it is compared with the rest of the mutual fund industry — more than 4,000 firms in total. All of them combined took in just a net $97 billion during that period, Morningstar data shows. Vanguard, in other words, scooped up about 8.5 times as much money as all of its competitors.
That's an extremely misleading comparison from the author. They are quoting inflows to Vanguard, but lumping inflows to Fidelity with outflows from other mutual fund companies. I'm pretty sure Fidelity takes in a lot of money too.

A more meaningful comparison would be inflows to Vanguard with inflows to Fidelity, or with the combined inflows to all the inflow-positive mutual fund companies.
Vanguard is taking in substantially more money than everyone else COMBINED.
Net; means they're counting all the active fund money that was pulled out, which is significant. This isn't a 1-1 inflow comparison.
Yes, I thought that was disingenuous of the NYT reporter. Better to compare inflows at Vanguard vs. inflows at all other firms with significant indexing business. Or, indexing inflows (aggregate) vs active funds outflow. But that wouldn't result in such a flashy result.
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Re: NYT article on Vanguard

Post by Vulcan »

triceratop wrote:Yes, I thought that was disingenuous of the NYT reporter. Better to compare inflows at Vanguard vs. inflows at all other firms with significant indexing business. Or, indexing inflows (aggregate) vs active funds outflow. But that wouldn't result in such a flashy result.
Well, here's the info for 2016:
http://www.investors.com/etfs-and-funds ... net-inflow
Vanguard lured in a net $182.997 billion to its mutual funds, according to Morningstar Inc.

All other mutual fund complexes with inflow — there were 314 if them — had combined net inflow of $151 billion.
Another 511 complexes had net outflow.

The closest single fund family to Vanguard was Dimensional Fund Advisors, which pulled in a relatively paltry net $21.417 billion.

Several of the industry's largest fund families suffered the heaviest net outflows in 2016.
No. 2 in net redemptions was Fidelity Investments, with $1.22 trillion in total net assets in funds, which lost $24.48 billion in net outflow.
So, no good news for Fidelity here either.
If you torture the data long enough, it will confess to anything. ~Ronald Coase
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Re: NYT article on Vanguard

Post by willthrill81 »

Vulcan wrote:
triceratop wrote:Yes, I thought that was disingenuous of the NYT reporter. Better to compare inflows at Vanguard vs. inflows at all other firms with significant indexing business. Or, indexing inflows (aggregate) vs active funds outflow. But that wouldn't result in such a flashy result.
Well, here's the info for 2016:
http://www.investors.com/etfs-and-funds ... net-inflow
Vanguard lured in a net $182.997 billion to its mutual funds, according to Morningstar Inc.

All other mutual fund complexes with inflow — there were 314 if them — had combined net inflow of $151 billion.
Another 511 complexes had net outflow.

The closest single fund family to Vanguard was Dimensional Fund Advisors, which pulled in a relatively paltry net $21.417 billion.

Several of the industry's largest fund families suffered the heaviest net outflows in 2016.
No. 2 in net redemptions was Fidelity Investments, with $1.22 trillion in total net assets in funds, which lost $24.48 billion in net outflow.
So, no good news for Fidelity here either.
Thanks for the link. That's what I said to begin with; there's Vanguard and everyone else. Fidelity isn't even close.
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Re: NYT article on Vanguard

Post by Fallible »

This from Morningstar's Alina Lamy says it simply:
“Since the crisis, investors have been saying, ‘I may not be able to control the market, but I can control how much I pay in mutual fund expenses.’ And when they look for quality funds with low fees, the first answer is Vanguard.”
Thanks for the link.
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Re: NYT article on Vanguard

Post by Vulcan »

Further at the investors.com link above,
The report noted that Fidelity's buildup of index funds in recent years enabled it "to offset some of the bleeding on the active (management) side of (funds) with $37 billion in index-tracking inflows."
If you torture the data long enough, it will confess to anything. ~Ronald Coase
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Re: "For Vanguard, Every Year is a Record"

Post by Wakefield1 »

Are (most) Vanguard actively managed funds also experiencing net inflows? (I assume most of the Vanguard inflows are into index funds)
Any other fund families experiencing net inflows into their actively managed funds?
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Re: "For Vanguard, Every Year is a Record"

Post by *3!4!/5! »

Interesting quote:
"for the first time in three years, Vanguard is not attracting more than 100% of the industry’s inflows."
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Good article in NY Times on Vanguard

Post by mancich »

[Moved mancich's post into this existing thread - moderator prudent]

https://www.nytimes.com/2017/04/14/busi ... .html?_r=0

Enjoy :beer
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Re: NYT article on Vanguard

Post by simplesauce »

This paragraph concerned me, any thoughts?

"Up and down Wall Street, where the sum of a firm’s assets under management has become a badge of power and sway, Vanguard’s ability to attract and run so much money with so few people has been a cause for envy and disbelief. Some have even warned that index funds will distort the broader market, especially if active stock pickers are pushed farther to the sidelines."
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Re: NYT article on Vanguard

Post by harvestbook »

simplesauce wrote:This paragraph concerned me, any thoughts?

"Up and down Wall Street, where the sum of a firm’s assets under management has become a badge of power and sway, Vanguard’s ability to attract and run so much money with so few people has been a cause for envy and disbelief. Some have even warned that index funds will distort the broader market, especially if active stock pickers are pushed farther to the sidelines."
I've read several blogs about this and the conventional wisdom (yeah, I know that means nothing on Wall Street) is that
(1) it would take decades before the indexers became even a majority of the traded market,
(2) there will always be people who aren't happy with beta and that it's human nature to want to beat the market
(3) there will always be contrarians hedging or taking the other side of the bet
(4)that the speculative return is not even that big a portion of growth, or as Bogle says, "The market is the market."
(5) and that NOW is the time for active managers to outperform, a bit of wisdom repeated every few months as a new era seemingly begins

Some say the market is already distorted because of passive indexing, but isn't the market ALWAYS distorted because of something? When has it ever been 'correct" and "normal"? I'm much more concerned over the shrinking numbers of public companies, the winner-take-all of of a handful of giant companies dominating all returns, the higher cost and risk to get lower returns, the likely generation of low bond returns, etc. but I imagine a lot of these factors will cancel out or mean-revert and the market will be the market.
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Re: NYT article on Vanguard

Post by davidlukewilcox »

I'm pretty sure that efficient market hypothesis only works when there's a substantial number of people out there trying to beat the market. Couldn't this be bad? When everyone indexes, that means valuations are not correct. Might this mean that we could be in a situation where indexing is the wrong choice?
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Re: NYT article on Vanguard

Post by sunnywindy »

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Re: NYT article on Vanguard

Post by CyclingDuo »

sunnywindy wrote:Lot's of people seem to be defending Fidelity on this thread. I don't doubt they are a great place to have your money. But, the owner is worth $14 billion https://www.forbes.com/profile/abigail- ... -400/women, so she got her money from somewhere, i.e. her customers. What are people's thoughts on this?

(I don't begrudge anyone from making lots of money, but I always think how no one at Vanguard is 'starving', so I wonder what other companies priorities are?)
Fidelity remains among the largest U.S. money managers with $2.1 trillion in assets under management and $5.6 trillion in assets under administration.

In terms of money flows in and out of mutual funds, don't forget the huge growth that ETF's have been seeing.

http://www.foxbusiness.com/markets/2017 ... d-etf.html
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Re: NYT article on Vanguard

Post by radiowave »

Here's a related article based on individual funds . . . Vanguard rounds out the top 3 mutual funds

http://www.investors.com/etfs-and-funds ... low-in-16/
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Re: NYT article on Vanguard

Post by PFInterest »

dont forget, Bogle thinks Fidelity wont exist in 5 years...
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Re: NYT article on Vanguard

Post by CyclingDuo »

PFInterest wrote:dont forget, Bogle thinks Fidelity wont exist in 5 years...
Did he say that? Is there a link to a quote?

It's hard to imagine the two largest fund companies - Vanguard, and Fidelity - both not being around in 5 years.

http://www.investmentnews.com/gallery/2 ... =Itemnr=11
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Re: NYT article on Vanguard

Post by arcticpineapplecorp. »

CyclingDuo wrote:
PFInterest wrote:dont forget, Bogle thinks Fidelity wont exist in 5 years...
Did he say that? Is there a link to a quote?

It's hard to imagine the two largest fund companies - Vanguard, and Fidelity - both not being around in 5 years.

http://www.investmentnews.com/gallery/2 ... =Itemnr=11
Yeah, I think you need to walk that one back PFInterest. I find no mention of that through a search query on google (of "bogle doesn't think fidelity will exist in five years").

Please provide a source if you're making a claim like that. I'd like to see specifically where and when and in what context he said that.
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Re: NYT article on Vanguard

Post by arcticpineapplecorp. »

simplesauce wrote:This paragraph concerned me, any thoughts?

"Up and down Wall Street, where the sum of a firm’s assets under management has become a badge of power and sway, Vanguard’s ability to attract and run so much money with so few people has been a cause for envy and disbelief. Some have even warned that index funds will distort the broader market, especially if active stock pickers are pushed farther to the sidelines."
Already been discussed too many times to mention. See some of the threads here:

https://www.google.com/search?sitesearc ... ne+indexed

General consensus is it won't be a problem for quite some time (if ever). If ever because if the market becomes inefficient, then people will want to start actively trading again which will then make the market efficient again. See how indexing works for you, while active managers continue to try and outsmart the market? Let them do what they will. In the meantime, be happy to get the return of the market minus costs.
It's "Stay" the course, not Stray the Course. Buy and Hold works. You should really try it sometime. Get a plan: www.bogleheads.org/wiki/Investment_policy_statement
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Re: NYT article on Vanguard

Post by peppers »

This might be what a poster was referring to about Fidelity.

viewtopic.php?t=203570
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Re: NYT article on Vanguard

Post by JMacDonald »

When people stop going to Las Vegas, then I will believe that everyone will index.
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Re: NYT article on Vanguard

Post by Yesterdaysnews »

People are finally waking up to see the investment / mutual industry for what it really is, and are beginning to understand how few organization out there really are structured to help the "little people". Perhaps it took a very serious financial crisis to wake people up to the fraud and greed rampant on wall street. Vanguard is far from perfect, but I will continue to do my part to support them and the principles they stand for. I wish them continued success!
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Re: NYT article on Vanguard

Post by mrc »

The main advocate of this doctrine was the founder, John C. Bogle, who retired in 1999 but runs a research operation on the Vanguard campus. For years, the firm has relied more on his simple message and the passion of his devotees than on fancy advertising campaigns to spread the word.
In the article, the boldface text is a link to this site!
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Re: NYT article on Vanguard

Post by PFInterest »

So sold vs not exist. Either way the outlook wasnt bright.
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Re: NYT article on Vanguard

Post by arcticpineapplecorp. »

peppers wrote:This might be what a poster was referring to about Fidelity.

viewtopic.php?t=203570
Thanks. I can't seem to get the article or find it not behind a paywall. Can anyone provide a link to see what Jack actually said?

The link to the boglehead post (viewtopic.php?t=203570) indicates Jack said Fidelity well be "sold" in five years. To some, that might be the same as saying "Fidelity won't be around in 5 years" which was what was originally said by PFInterest. But I think context matters. Saying a company "won't be around" is kinda like saying it's going out of business without really saying that. That's very different from it being "sold" to a competitor most likely for a profit or some multiple of annual revenues. There can be many reasons for a privately held company to sell to a competitor, some of which could be legitimate like the current owner is 87 years old (https://en.wikipedia.org/wiki/Edward_Johnson_III) and even though his daughter Abigail could take it over, since she currently co-owns and co-runs it perhaps she doesn't want to and wants to sell the business than continue managing it on her own. That could be the succession plan for him and her. Who knows. It's all speculation anyway.

Livesoft already stated as much in viewtopic.php?t=203570 :
I'm happy to provide some incite. Companies are bought and sold all the time. Founders sometimes like to cash out or the family scions would rather have the money than run the business. So I can see somebody like JP Morgan or Goldman Sachs or Edward Jones or a private equity group buys Fidelity Investments.
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Re: NYT article on Vanguard

Post by iamlucky13 »

JMacDonald wrote:When people stop going to Las Vegas, then I will believe that everyone will index.
Nice.

Personally, I have both visited Vegas and dabbled both in picking my own stocks. I find stock picking the more interesting of the two, and it's easier to make money doing it.

It's been interesting to realize as I study more that it's not just Vanguard anymore. My employer allows us to skip limited selection of mutual funds they offer and direct our 401k to a Schwab investment account (PCRA). A lot of their index ETF's are neck and neck with Vanguard for fees.
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CNBC: Vanguard Is Growing Faster Than Everybody Else Combined

Post by mlebuf »

From the article:
By any measure, these are staggering figures. Vanguard's assets under management have skyrocketed to $4.2 trillion from $1 trillion seven years ago, according to the company. About $3 trillion of this is invested in passive index-based strategies, with the rest in funds that rely on an active approach to picking stocks and bonds.

WOW!

Link: http://www.cnbc.com/2017/04/16/vanguard ... bined.html
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Re: CNBC: Vanguard Is Growing Faster Than Everybody Else Combined

Post by *3!4!/5! »

Similar thread about a similar article.
viewtopic.php?f=10&t=216526
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Re: "For Vanguard, Every Year is a Record"

Post by LadyGeek »

FYI - I merged mlebuf's thread into here. While it's not the same article referenced by Taylor Larimore, the discussion is similar.
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Re: [Vanguard Is Growing Faster Than Everybody Else Combined]

Post by LadyGeek »

FYI - I merged kd2008's thread into here, which is same NY Times article linked by mlebuf (CNBC.com reposted the article). I also retitled the thread.
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Re: NYT article on Vanguard

Post by nedsaid »

PFInterest wrote:dont forget, Bogle thinks Fidelity wont exist in 5 years...
What Mr. Bogle said was that Fidelity would be sold in five years.
A fool and his money are good for business.
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