Because Vanguard has been investor-owned since our founding in 1975, our interests have always aligned with those of our investors. That’s why our investment management approach is one of unwavering focus on our clients’ success. We use proven methods and principles to fuel the performance of truly enduring investments.
Gregory Davis: Client first is really the ethos of how we operate day to day. We want to make sure that, we are delivering performance that's commensurate with what the client is expecting from a risk standpoint, a performance standpoint and ultimately their goal standpoint.
So when we think about our investment philosophy, much of what we do is trying to look through the short term economic cycles and really focusing on what's in the best interest of our clients over time. And a big part of our strategy is always been focused on discipline, risk control, but also that long term approach to investing.
We have really tight tracking on the index portfolios, both in fixed income as well as equities. And our goal is to produce top quartile performance when it comes to our actively managed funds on the Muni side, on the taxable fixed income side, or even on the quantitative equity side.
Our investment teams are highly specialized. And much of that expertise is backed up by a globally integrated team with investment locations in the US, Europe, and Asia-Pacific. And we manage these portfolios using a collaborative approach we're getting the very best thinking from people around the globe. All of our efforts are singularly focused on our clients that means that as we get better at what we do and that's our aim every single year that value that gets created goes back to our shareholders and that makes us very, very unique.
"We’re focused on what’s in the best interest of our clients over time."
Chief Investment Officer
What makes our investment approach unique?
Kaitlyn Caughlin: Vanguard's product strategy really centers on our desire to offer best performing funds and ETFs that have enduring investment merit, that improve outcomes for our clients.
Sara Devereux: We deliver a consistent outperformance by anticipating risks. In terms of our top line investment track record, it's impressive. But we would argue that the journey by which we got there is equally important to fixed income investors. We strive to deliver a consistent investment experience with alpha that comes from reliable sources, and a focus on risk management, and protection against downside risks.
John Ameriks: In our Alpha strategies, we're using a variety of different factors or themes to try to identify firms that we think have really strong fundamental economic strength relative to peers within the same sector or industry group.
Rodney Comegys: So it's the small things in indexing that matter. It's really ensuring that each and every execution is done in the best way possible. It's another way of saying, all the pennies matter. Really, every day and indexing there's a series of micro-choices that add up to real savings and better indexing returns for our clients.
John Ameriks: We know there's an enormous amount of noise in markets. And we know that markets can rise dramatically on the basis of sentiment and fall just as dramatically or in some cases even more dramatically.
Patience and persistence is what we think about as we're trying to add Alpha in the various mandates.
Gregory Davis: Our goal is ultimately to be in a top quartile of investment performance for a given mandate. So ultimately, we want to make sure that in the long run, our performance outperforms at least 75% of the competitive universe when it comes to investment performance. So we feel that by leveraging technology, talent, our ownership structure with discipline, risk control, we're able to produce really strong investment performance for our clients in the long run.
Notes: For the three-year period ended March 31, 2023, 6 of 6 Vanguard money market funds, 48 of 115 bond funds, 19 of 31 balanced funds, and 161 of 220 stock funds (in total, 234 of 372 Vanguard funds) outperformed their peer group averages. For the five-year period, 6 of 6 Vanguard money market funds, 86 of 111 bond funds, 26 of 30 balanced funds, and 163 of 209 stock funds (in total, 281 of 356 Vanguard funds) outperformed their peer group averages. For the ten-year period, 6 of 6 Vanguard money market funds, 80 of 90 bond funds, 21 of 24 balanced funds, and 142 of 184 stock funds (in total, 249 of 304 Vanguard funds) outperformed their peer group averages. Results will vary for other time periods. Only funds with a minimum three-, five-, or ten-year history, respectively, were included in the comparison. Results for other time periods will vary. Note that the competitive performance data shown represent past performance, which is not a guarantee of future results, and that all investments are subject to risks. For the most recent performance, visit vanguard.com/performance.
Source: Lipper, a Thomson Reuters Company.
We continually look for opportunities to lower the cost of our investments. Research shows that lower-cost investments outperform higher-cost alternatives—which means that the more we drive down costs, the better investors’ chances for investment success.1
Vanguard’s scale, discipline, and performance track record have enabled us to attract highly talented investment professionals. Our investment managers around the world bring deep expertise, tenure, and diverse backgrounds to our proven investment approach.
Our approach provides long-term value beyond performance. It provides reliability, consistency, and stability that have served our clients well for decades.
1 Wallick, Daniel W., Brian R. Wimmer, and James J. Balsamo, 2015. Shopping for Alpha: You Get What You Don’t Pay For. Valley Forge, Pa.: The Vanguard Group.
Matthew Brancato: An enduring investment idea is one that over the long term improves the chances that an investor will be able to realize their goals. It's good to just start and think about what it is that makes a product enduring in nature and how that separates from the idea of a fad.
Molly Concannon: The questions we ask when launching a product are, one is there an enduring investment merit? We want to launch products that have proven to have and if there's economic rationale for real returns. Two. We look at our business strategy. Three, we look at the needs and preferences of our clients, and four we look at our investment capabilities.
Matthew Brancato: It's one of the areas that we spend a lot of time on is the existing product lineup. So we're not always looking for the next big thing that we think is going to generate a lot of profitability for the firm because that's not how we're organized. That's not who we are.
So from a philosophical standpoint, we really try to keep client needs and preferences at the center of product design, and we carry that all the way through how we steward assets in the context of the ongoing management of our product lineup.
There are aspects of our product lineup that have not changed and will not change. Things like diversification, low cost, focus on the long-term areas like that are really core to who we are and will not change.
Molly Concannon: It's what will make our client successful and given Vanguard structure and our alignments with clients. If our clients are successful, that will make Vanguard successful. That's a real differentiator when you compare Vanguard to competitors.
All of our mutual funds and exchange-traded funds (ETFs) are built for the long term and designed solely with our clients’ needs in mind.
We weigh each product idea against a consistent set of standards to help us determine which products to launch. The following process guides our decisions:
Does the product have enduring investment merit?
Vanguard avoids speculative investments and short-term fads. Instead, we focus on asset classes that earn positive, real returns from dividends, interest, and other sources of regular cash flows.
Does the product fulfill the long-term needs of its targeted clients?
As a global company, we don’t take a one-size-fits-all approach to launching products. Instead, we adhere to a targeted strategy. We aim to launch products that satisfy the needs and preferences of specific client types—and we also evaluate clients to ensure that the product is appropriate for their long-term interests.
Can we deliver a compelling advantage over competitors?
Vanguard is known for its pioneering funds and long-term outperformance. We thoroughly assess the attributes of each product with the goal of introducing those that will stand out in the marketplace and have the long-term success our clients have come to expect.
Is it feasible to launch the product?
We will launch a product only after a thorough analysis of any legal and regulatory constraints, along with any risks we may face.
All Vanguard products are designed and vetted using this structured, disciplined approach, which aligns with our client-first philosophy.
That philosophy is rooted in our unique investor-owned organizational structure, which aligns our interests with those of our clients.2 This enables our low-cost investment ethos and long-term perspective.
2 Vanguard is investor-owned, meaning the fund shareholders own the funds, which in turn own Vanguard.
Christopher Alwine: Our roots are really an active management. Going back to 1929 with the launch of the Wellington fund. Today we have over $1.3 trillion in active assets in over 70 US based funds.
Arvind Narayanan: For active fixed income process at Vanguard is really built around three key tenets. First, having a long term perspective. Second, is to have diversified sources of alpha, where we're not reliant on a single market risk factor to drive returns in the portfolio. And third, is to have a disciplined approach to risk taking, where our cost advantage gives us that benefit and allows us to be patient and take risk in the market only when the opportunities are there.
Matthew Brancato: Our active funds have outperformed over the last 10 years. We've been able to do that by getting three things right: cost, talent, and patience. We've allowed investors to keep more of their return, we've hired some of the best managers in the world, and we've been patient and allowing that alpha to materialize over a period of time.
Sara Devereux: Our active edge in fixed income investing revolves around compounding alpha. We focus on a diversified set of reliable strategies that are repeatable and scalable, and we don't have an over reliance on large macro bets. In addition, we have a differentiated risk framework that is strengthened by our low fees. This gives us the breathing room to take risk up and down according to the opportunity set and ultimately results in the best risk adjusted returns over time.
Kaitlyn Caughlin: We complement our internal approach with external partnerships. Many investors don't realize the depth of our sub advised active franchise where we actually can complement our internal expertise with expertise that's built in many other firms around the world.
John Ameriks: A lot of the rigor comes in, in the debates that we have a lot of people with very strong academic backgrounds, PhDs in finance, economics, mathematics, a couple of physicists thrown in as well, who bring a variety of different lenses to analyzing whether a model is well-designed, whether it's fit for purpose, and how it fits into all of the pieces of the process.
Sam Priyadarshi: And a typical day my team is looking at portfolios, and our positions, and how they're trending, how the market is trending, they're monitoring geopolitical events, macro events, movements in the marketplace. It's a very fast paced dynamic and fluid workplace.
Gemma Wright-Casparius: We work in conjunction with the investment strategy team so the economists at Vanguard and we define where we see the spectrum of probabilistic outcomes in the marketplace what's our central view, what's our tail risks up and down from that.
Christopher Alwine: Successful investing requires a long term perspective as well as a disciplined approach. So you're going to see a very collaborative environment with a very focused team looking to drive value into the portfolios by identifying those opportunities that make sense to implement.
John Ameriks: We're looking to try to find an insight that others may find harder to uncover or may be not patient enough to take advantage of, and that takes just an awful lot of work and focus and rigor to get right.
Vanguard is one of the largest active managers in the world, with $1.6 trillion in actively managed mutual funds.3 And, as shown, the performance of our active funds has been consistently strong.
3 Source: Vanguard, as of April 30, 2023.
Notes: For the three-year period ended March 31, 2023, 6 of 6 Vanguard money market funds, 32 of 54 bond funds, 8 of 12 balanced funds, and 40 of 50 stock funds (in total, 86 of 122 Vanguard funds) outperformed their peer group averages. For the five-year period, 6 of 6 Vanguard money market funds, 48 of 52 bond funds, 10 of 11 balanced funds, and 39 of 46 stock funds (in total, 103 of 115 Vanguard funds) outperformed their peer group averages. For the ten-year period, 6 of 6 Vanguard money market funds, 43 of 44 bond funds, 6 of 6 balanced funds, and 32 of 37 stock funds (in total, 87 of 93 Vanguard funds) outperformed their peer group averages. Only funds with a minimum three-, five-, or ten-year history, respectively, were included in the comparison. Results for other time periods will vary. Note that the competitive performance data shown represent past performance, which is not a guarantee of future results, and that all investments are subject to risks. For the most recent performance, visit vanguard.com/performance.
Source: Lipper, a Thomson Reuters Company.
Our active funds, like all Vanguard funds, are built to meet our investment design standards. Designed to endure, they are managed by our talented in-house managers and proven external advisors. These experts research and apply fundamental and proprietary strategies with the goal of delivering long-term outperformance for our investors. The results speak for themselves.
Vanguard manages the oldest balanced fund in the United States, Vanguard Wellington™ Fund. It was introduced in 1929 and thrives today.
Rodney Comegys: Vanguard's been doing indexing since the mid-1970s. Really Mr. Bogle made the first index fund for retail investors. From there, we've taken and expanded it. We were the first to offer international indexing, small caps, small company indexing, bond indexing, and emerging markets indexing.
Andy Maack: One of the keys of indexing is low costs which Vanguard is able to do with our structure. So everything that we do. The way that we trade, the way that we think, is always aligned to what is best for our shareholders and best for the portfolios.
Michelle Louie: We manage our entire book of business together as a team. What you'll see is a lot of conversations happening on the floor in real time talking about what is going on in the markets, what's going on in our portfolios, what types of complex actions were trading. So I think the camaraderie and how we work together on the team and with our partners on the floor is actually one of the key ingredients to our clients having a great experience with us.
Andy Maack: Behind me are 25 portfolio managers and traders that are trading on behalf of our index portfolios. We have a domestic team that handles our domestic portfolios as well as an international team that handles the trading portfolio management for our global portfolios. We have traders and portfolio managers all around the globe.
Our portfolio managers here in the US will pass their orders to the different regions to take advantage of liquidity and also have subject matter experts that are Vanguard traders in those regions handling those orders. This allows us to really understand the markets as well as what strategies are best to implement in those markets to make sure we're adding value for our shareholders.
Michelle Louie: We use a combination of value added proprietary trading strategies, but we marry them with an approach that is hyper focused on cost. So every decision I make for our investors' portfolios, I always trade off what is the cost of doing this?
Rodney Comegys: We've worked tirelessly over the years on execution, basically making sure when we have to buy securities we do so at the best price possible for our investors at the lowest possible execution costs. We partner with our index providers and use blockchain as our enabler. It's effectively the engine that lets us communicate and exchange data between ourselves and our index providers and we found that to be a real improvement when it comes to both speed and quality of data.
Michelle Louie: When we look to measure Vanguard index fund performance, we try to trade off essentially three main things. So the first thing we try to look at is tracking error of the risks that we take. The second thing we look to balance alongside risk is cost, and then the third thing that we try to trade off with those other two typically is tax efficiencies.
We are like people sweeping up pennies on the floor. We care about every fraction of a penny every penny we can get because we believe that that's money that belongs to our investors.
For us, indexing is about more than just products. It’s central to our business. We are committed to indexing, and we persistently work to give our clients top-performing index funds without trade-offs. That means applying disciplined benchmarking and risk-management techniques while continually lowering operating and transaction costs.
Kaitlyn Caughlin: Vanguard has a very unique approach to investment management that has been built over a 40-year history around the global market. And we really define our investment management approach in three key ways.One, we have deep expertise. Two, we take a disciplined approach to risk taking. And three, we have global presence and perspectives. All of which joined together to a proven investment approach that delivers value and outcomes for our clients day in and day out.
We actually have over 400 investment professionals in our investment portfolio management teams, but we don't stop there. We look outside too to ensure we're really drawing in the very best talent around the world. And it's a bit different than our competitors. We actually are not reliant on just our internal pool of talent, we do both.
Joseph Davis: There's two primary benefits of having global expertise and how that benefits our clients. One is just the power of diversity of teams because any two individuals can approach a problem from a different angle. And so you have individuals who live in different countries, different educational backgrounds, from different cultures, that in of itself is an asset. Secondly is the power of global expertise to go deep on an issue.
And so there are issues increasingly in the global economy and the financial markets where news from Asia or for Europe can have significant ramifications even for the US market. That's more so today than it ever was in the recent past. And so having local experts in the market that are communicating with each other leads to better answers, and I think it gives us a differentiated edge in the marketplace.
Kaitlyn Caughlin: Disciplined risk-taking has been part of who Vanguard is from the very beginning. From Mr. Bogle's era.
Joseph Davis: Our risk management approach is very disciplined. And what I mean by that is really trying to focus to outperform a benchmark or to a line of fund's performance to its investment strategy in a very coherent and very clear way. And so I think our approach to risk management does not mean that we're not infallible, I think what it does though, it focuses the portfolio management teams on adding a level of return commensurate with the risks. And so not being afraid to ask questions and looking deeper internally, I think, gives us an edge in the portfolio management business.
Kaitlyn Caughlin: We really think those three things-- deep expertise, disciplined risk-taking, and a global presence and perspective is a differentiated approach for our investors and drives value for the market and for our individual clients.
We have developed a broad but carefully defined selection of investments that continues to evolve as investor preferences and markets change. We partner with some of the industry’s top managers, maintain a disciplined mindset, and use our global scale to benefit investors worldwide.
Vanguard attracts and retains experienced, passionate portfolio managers with diverse backgrounds and proven track records of producing strong outcomes for investors.
We put our current and prospective investment managers through a rigorous evaluation process that focuses on both people and technology. This multifaceted approach to manager selection and oversight emphasizes the attributes—both qualitative and quantitative—that lead to long-term results.
Our internal investment teams work in a collaborative environment that fosters timely interactions, promotes diversity of thought and idea generation, and ensures thoughtful decision-making and risk management.
We also work with well-respected, leading investment advisory firms, including Wellington Management Company, PRIMECAP Management Company, and Baillie Gifford. In keeping with our focus on the long term, we’ve built long-standing relationships with our external advisory firms. The average length is 13 years. Our longest relationship, with Wellington, has spanned more than 45 years.
Average external relationship
Tenure of oldest fund
Longest external relationship
All data as of March 31, 2023.
Our long-term perspective affords us the patience to take risks only when both the rewards and the likelihood of success are greatest.
Our disciplined approach to risk is embedded in our culture; it informs every aspect of our investment style. For our fund managers—who are aware of rapid changes in markets and how those changes can affect their strategies—this discipline results in a team-based approach where risk management is built into the investment process.
Maximizing risk and rewards
Building risk management into the process
Leveraging resources across the world
Our scale and global investment management capabilities position us to give clients worldwide the potential to achieve long-term success.
Serving more than 30 million investors in Europe, Australia, the Americas, and China, Vanguard is truly a global firm.4 We combine our global infrastructure with local expertise to identify prudent investment opportunities across regions, industries, and issuers and to bring the Vanguard way of investing to clients around the world.
19 offices in 12 countries
More than 30 million clients
24 external advisors across 4 continents
All data as of March 31, 2023.
4 Source: Vanguard, as of June 30, 2022.
In doing so, we don’t take unnecessary risks with our investors’ hard-earned money for the possibility of short-term gains. We build accountability into our process by tying portfolio managers’ compensation to the performance of the funds they oversee. And we attract the industry’s most talented professionals who want to work in a collaborative and thoughtful environment where we care for our investors’ assets as if they were our own.
We believe in the possibility of a better future and take steps to make it a reality. Vanguard is here for those who see the world the way we do. We’re here for financial professionals who see the value in building relationships with people and caring for their investments. We’re here for people who want to feel confident about tomorrow without losing sight of what is important today. We’re here for those who serve as fiduciaries for their organizations, and we genuinely empathize with the employees who will someday retire from those organizations.
No matter what people invest for, Vanguard is where investors come first.
All investing is subject to risk, including the possible loss of the money you invest.
Investments in bonds are subject to interest rate, credit, and inflation risk.
Vanguard ETF Shares are not redeemable with the issuing Fund other than in very large aggregations worth millions of dollars. Instead, investors must buy and sell Vanguard ETF Shares in the secondary market and hold those shares in a brokerage account. In doing so, the investor may incur brokerage commissions and may pay more than net asset value when buying and receive less than net asset value when selling.