Vanguard CEO Bill McNabb will be replaced by Chief Investment Officer Tim Buckley, effective Jan. 1, 2018. The retiring McNabb has been with Pennsylvania-based Vanguard since 1986 and became the company's third chief executive officer in 2008 and chairman in 2009.

"Under the planned succession, Mr. Buckley, 48, will become the firm's fourth CEO since its founding in 1975," said Vanguard in a statement. "Mr. McNabb, 60, who has served as Vanguard's CEO since 2008, will remain as chairman of the board. Greg Davis, 46, global head of Vanguard's Fixed Income Group, assumes the position of chief investment officer." Incoming CEO Buckley is a long-serving member of Vanguard's investment committee and has two degrees from Harvard, including an M.B.A. (See also: Guide to ETF Providers: Vanguard.)

Vanguard was already known as a low-cost leader in the world of index funds when McNabb became CEO and was just getting going in the world of exchange-traded funds (ETFs) prior to his ascent to the top spot at the company. Under McNabb's direction, Vanguard has brought its low-cost leadership to the ETF space, offering some of the least expensive ETFs in the U.S. while consistently lowering fees on those products. 

"Vanguard tends to have among the lowest-cost products in their investment style and regularly lower fees, benefiting from its scale," said CFRA Research's Director of ETF and Mutual Fund Research Todd Rosenbluth in a note out Thursday. "In addition, when they have had success, it has often resulted in peer providers lowering fees and/or launching new, cheaper products designed to regain lost market share. The successful iShares Core Series and Fidelity's sector ETF lineup are a couple of examples." (See also: Vanguard Is At It Again With More Fee Cuts.)

As of July 11, Vanguard had $736.2 billion in U.S. ETF assets under management, making it the second largest U.S. ETF sponsor behind only BlackRock, Inc.'s (BLK) iShares unit. Today, 22 of the 100 largest U.S. ETFs are Vanguard funds, a group that includes well-known fare such as the Vanguard S&P 500 ETF (VOO), the Vanguard FTSE Emerging Markets ETF (VWO) and the Vanguard Real Estate ETF (VNQ).

Vanguard's ascent in the ETF space has occurred with a comparatively small product lineup, while the company has resisted the smart beta phenomenon to this point. That could change in the future. "Though Vanguard has fewer ETFs than other industry heavyweights, the firm has greater than $1 billion on average in these offerings," adds Rosenbluth. "However, CFRA expects the firm to launch active equity and smart beta ETFs in the near term, leveraging their strong quantitative management team. Such a move will further shakeup the ETF industry." (See also: Smart Beta ETFs: The Pros and Cons.)