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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.

"Every year in January there is a headline that says it's a stock pickers market, and that has just not been the case," says Bill McNabb, Vanguard's CEO since 2008. "High cost active management is effectively dead as a practice." McNabb cites the performance of index funds  over the past decade in addition to the muted expectations for equity returns for the next few years. Vanguard says investors should expect 5-7% from equities in 2017, lower than the 6-8% trend of the past decade. Vanguard announced that McNabb will be stepping down as CEO at the end of 2017, but will remain as the company's chairman.


Today, Vanguard invests about $3 trillion in passive index-based strategies and the remainder in actively managed funds that pick individual stocks and bonds. Indeed, with its size, Vanguard can position its funds to be major holders of some of the hottest and most actively traded stocks in the world, like Amazon.com (AMZN) and Apple (AAPL ). According to the most recent proxy statement from both companies, Vanguard holds more than 5% and 6% of their shares outstanding, respectively.

Still, Vanguard lives by the index fund and grows by it. Founder and former CEO John Bogle created the index fund in 1976 and called it the Vanguard 500. It tracks the S&P 500, holding 510 stocks with $531 billion in net assets, according to the company.  On a recent visit to Mr. Bogle’s office on Vanguard’s sprawling 287-acre campus in Malvern, PA, he told us the origins of the Index fund and how he launched what would become the largest mutual find company on the planet.

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