Saturday, 15 July 2017

How Vanguard Dominated the Mutual Fund Industry

Mutual Funds

One billion dollars per day. That’s the amount of money that has been flowing into Vanguard Funds since the election. The index fund giant says from 2013 through 2016 investors dropped $823 billion into its funds, more than 8.5 times the rest of the mutual fund industry, according to Morningstar, as reported by the New York Times.

With $4.2 trillion in assets under management, the mutual fund giant has surpassed its peers and done so in its quiet and fastidious manner. Just seven years ago, Vanguard had but $1 trillion under management and questions arose as to whether index investing, central to Vanguard’s investment philosophy, along with a low cost fund structure, was built to last. Those questions have been summarily dismissed as Vanguard’s competitors continue to look for ways to lower fees while delivering consistent returns.

Source: Investopedia

What is a Mutual Fund?

A mutual fund is a professionally managed investment fund that pools money from many investors to purchase securities. Mutual funds have advantages and disadvantages compared to direct investing in individual securities. The primary advantages of mutual funds are that they provide a higher level of diversification, they provide liquidity, and they are managed by professional investors. On the negative side, investors in a mutual fund must pay various fees and expenses.

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