Vanguard's Performance Report: Vanguard Funds Surpassed Peers Over Long Term

[HI Bill]

It's not just cost, but total performance that counts. There have been some recent discussions as to which of the major trading houses (Fidelity, Schwab, Vanguard, etc.) are the best.

The article linked below from June 30, 2018, shows that over 1, 3, 5 and 10-year horizons, all classes of Vanguard funds outperformed their peers' funds, with 100% of their funds outperforming in money market funds. The only place they failed to exceed 50% was for bond funds in the one-year category (at 49%). The source of the data is Lipper, a Thomson Reuters Company. I did not verify their findings. The percentages are the percentage of Vanguard funds that outperformed their peers in the same peer category for the reviewed period.

While I realize that other companies may have a better web interface, or better customer service, or make it easier to make changes, performance for people who manage their own accounts is most likely paramount.

Thoughts?

https://investornews.vanguard/performance-report-vanguard-funds-surpassed-peers-over-long-term/

 

[MBAustin]

Thanks for the report, Bill. It makes sense that VG's advantage is higher for the longer time periods because the effect of fees is cumulative. It's nice to see it documented this way.

 

[HI Bill]

It makes sense that VG's advantage is higher for the longer time periods because the effect of fees is cumulative.

Vanguard's advantage due solely to cost may be eroding with the introduction of no-cost funds by Fidelity and others! Next year, Vanguard may not be able to boast this across the board.

 

[Oz investor]

i hold two Vanguard products and several products from rival groups ( not mentioned earlier )

i buy ETFs as hedges ( insurance ) against my bad selection when buying a trend ( or sector ) say i buy into two banks but ALSO by into an ETF ( or two ) focused on the financial sector .

most of the ETFs have performed well but so has the markets since 2011 ( when i started investing heavily )

as Warren Buffet would ask , how will my portfolio look when the tide goes out ??

( i don't know )

maybe the ETFs with their constant re-balancing will prove superior , and maybe they won't .

i don't mind paying slightly extra fees and long as the overall performance covers the extra costs ( higher fees and lower yields when the fund SHOULD be flying is very unattractive to me )

 

[foxfirev5]

The times are changing. While I hold a fair chunk at VG in a 3 mutual fund portfolio, their advantage has shrunk to nil. Other houses have picked their game up and certainly offer better overall value.
While making rather mundane changes to DM's accounts this week I have dealt with the usual incompetent reps and have realized that repeat calls and follow up are the norm. My personal experience is that they are great as long as you don't need to deal with a person.

 

[Scuba]

I hold several Vanguard ETF’s in my Fidelity account. Best of both worlds; get the VG results with the Fido website and customer service.

 

[HI Bill]

I hold several Vanguard ETF’s in my Fidelity account. Best of both worlds; get the VG results with the Fido website and customer service.

How much does Fidelity add in fees on top of VG's fees? I hold VG in a 401(k) through Merrill Lynch, and they tack on 0.01%.

 

[target2019]

Hats off to Vanguard. They beat all but 9-10% of peers' funds in 10 year period. Hope I got that right.

 

[JustCurious]

The times are changing. While I hold a fair chunk at VG in a 3 mutual fund portfolio, their advantage has shrunk to nil. Other houses have picked their game up and certainly offer better overall value.

I don't agree that Vanguard's advantage has shrunk to nil, but I do agree that Vanguard has forced other mutual fund providers and brokers to lower their fees in order to keep up with the competition, and that is a very good thing for investors. We owe John Bogle and Vanguard a debt of gratitude for that.

 

[jazz4cash]

It's not just cost, but total performance that counts. There have been some recent discussions as to which of the major trading houses (Fidelity, Schwab, Vanguard, etc.) are the best.

My thoughts are total performance includes customer satisfaction and I thought that's where this was going but the report apparently only deals with investment return results. We use VG and Fido and they are both excellent. My impression of Schwab is also very positive, so we will probably use at least two of these three going forward.

I don't see where the report says anything about VG vs. Schwab or Fido specifically except in the MM category where VG beat 100% of their peers. Maybe that detail is contained in the fine print. Actually I would've thought their cost advantage would have given them a much higher score in the bond category as well.

 

[target2019]

Going forward is important too.


Others can add their low cost fidelity funds to the picture below.

One aspect missing from the OP study is very important. In the next year, maybe sooner, we will be looking at rolling over (2) 401k accounts as well as multiple funds/stocks from inheritance. To be honest, as a Vanguard customer I have reservations about how well the rollover/transfer processes would go with Vanguard. Still have some time to decide, but we're leaning towards Schwab at this time.

 

[OldShooter]

I don't agree that Vanguard's advantage has shrunk to nil, but I do agree that Vanguard has forced other mutual fund providers and brokers to lower their fees in order to keep up with the competition, and that is a very good thing for investors. We owe John Bogle and Vanguard a debt of gratitude for that.

++1

 

[VanWinkle]

Without Vanguard's low cost mutual funds and ETFs, the competition would still be in the 90s with loads and 12-1b expenses on every fund. Expense ratios of .75 to 1.75 would be the low side if not for the work of John Bogle.

 

[MrLoco]

For those talking about Fido's zero fee funds and the low cost index funds from Schwab and others ( where they cut Vanguard's fees by 1 basis point in some cases (WOW!!!); my question would be: "So just now you decide to follow suit and offer low fee or (zero fee funds) as Vanguard has done for the past 40 years? So basically you have been screwing me for the past 40 years....Right?" No thanks. You want to impress me....refund me 50% of the fees you were charging me for the past 40 years !!!

 

[jazz4cash]

Without Vanguard's low cost mutual funds and ETFs, the competition would still be in the 90s with loads and 12-1b expenses on every fund. Expense ratios of .75 to 1.75 would be the low side if not for the work of John Bogle.

+1

 

[HI Bill]

I rolled over both 401(k), beneficiary IRA, and an annuity to VG with no problems.The beneficiary IRA had to be converted to my name with the old company, prior to transfer due to VG policy, making it a two-step process.

 

[OldShooter]

... So basically you have been screwing me for the past 40 years....Right? ...

Don't take it personally. They are businesses and they price to maximize profit based on costs and aspirations for share. If you were a shareholder (and you may be if you buy index funds) you would want nothing less.

Vanguard is unique in the industry, not being a stock company but in being owned by its mutual fund shareholders. That's why their prices have been lower.

Recently the game has been changing and all of the for-profit fund companies have had to reduce prices to meet competition. We will eventually see increases if the current prices turn out to be below costs and they are unable to find some other ways to increase revenue.

 

[Amethyst]

It seems analogous to the difference between banks and credit unions. We have paid almost no banking fees, other than trivial wiring fees and modest borrowing costs, for the past 38 years; 38 years ago, that was a huge advantage of belonging to our CU. Now, many banks offer no-fee accounts (although they always have a minimum amount).

Once I made a mistake and overdrew our CU checking account. They charged us $25, then reversed the charge because [-]they love us[/-] we are good customers. Would a bank do that?

Vanguard is unique in the industry, not being a stock company but in being owned by its mutual fund shareholders. That's why their prices have been lower.

.

 

[Scuba]

How much does Fidelity add in fees on top of VG's fees? I hold VG in a 401(k) through Merrill Lynch, and they tack on 0.01%.

Fidelity does not charge fees to hold assets from VG. They do charge a small commission to purchase them but I have a lot of free trades so didn’t pay anything.

 

[kgtest]

Assets under Mgmt (trillions):


VG-5.1
Schwab- 3.36
Fidelity- 2.45


FWIW.

 

[friar1610]

It seems analogous to the difference between banks and credit unions. We have paid almost no banking fees, other than trivial wiring fees and modest borrowing costs, for the past 38 years; 38 years ago, that was a huge advantage of belonging to our CU. Now, many banks offer no-fee accounts (although they always have a minimum amount).

Once I made a mistake and overdrew our CU checking account. They charged us $25, then reversed the charge because [-]they love us[/-] we are good customers. Would a bank do that?

Amen. I've been a fan of CUs for a long time. I think it was 1967 when I joined Navy Federal CU. I've been with them ever since. Along the way I've also been a member of several others.

 

[stephenson]

My experience:

Schwab - none
Vanguard - 30 years +
Fidelity - 3 years +

Vanguard - dependable and toady - slow in every possible way wrt customer support.

Fidelity - dependable and progressive - fast and efficient in every possible way wrt customer support.

Net: I have 1/3 at Vanguard and 2/3 at Fidelity. I hope Fidelity gets Full View fixed - I want MORE of that sort of visibility - AND, I want it easy and transparent.

 

[jazz4cash]

Assets under Mgmt (trillions):


VG-5.1
Schwab- 3.36
Fidelity- 2.45


FWIW.

Interesting. What is the source for this data?

 

[Qs Laptop]

So what's the lesson? Use past performance as a tool to decide where to invest?

 

[kgtest]

Interesting. What is the source for this data?

I just looked at each houses search and searched Assets Under Management. This was the latest data I could find in the search results.