Vanguard Group Net Worth: AUM, Growth, and ETFs

Vanguard Group, Inc. is a global leader in investment management, well-known for pioneering low-cost index funds. Due to its unique investor-owned structure, Vanguard Group’s net worth isn’t publicly reported, but the firm holds over $9 trillion in managed assets on behalf of its fund holders.

At Business2Community, we conducted extensive research to give you an in-depth look at Vanguard’s journey, highlighting its key milestones, challenges, and strategies that helped it become one of the world’s largest asset managers. Read on to explore Vanguard’s successes, controversies, and lessons in sustainable growth.

What is Vanguard Group’s Net Worth?

Because of its unique investor-owned structure, Vanguard Group’s net worth is not publicly available. As of March 2024, the firm had $9.3 trillion in assets under management. Being a privately held company, Vanguard does not have a market cap. Looking at its closest competitor, BlackRock, Inc., which is valued at about $130 billion, Vanguard is estimated to be worth around $100 billion.

With its headquarters in Valley Forge, Pennsylvania, Vanguard Group is the world’s biggest mutual fund issuer and the second-biggest issuer of exchange-traded funds (ETFs) behind BlackRock. Vanguard, BlackRock, and State Street are considered the “Big Three” index fund managers and each has a massive role in the US economy. The firm has over 20,000 employees worldwide.

Vanguard Group Revenue

Vanguard Group is recognized for its consistent financial performance. Managing over $9 trillion in global assets, Vanguard is a key player in the investment industry. It has achieved this growth in assets under management through a reputation for providing cost-effective investment options, including index funds and ETFs.

ETFs are a type of investment fund that is also directly traded on stock exchanges. Index funds on the other hand are a portfolio of stocks designed to reflect the performance of a financial markets benchmark index such as the S&P 500. Both are popular choices for individuals as they are relatively low-cost and provide a certain degree of diversification and security.

Vanguard’s revenue comes from management fees on funds and financial planning services. Its innovative approach to ownership and commitment to minimizing fees for clients has positioned Vanguard as a leader in asset management as it appeals to investors who are seeking cost-effective, diversified investment options.

With such an incredible amount of assets under its management these fees add up to a significant income for Vanguard Group. While Vanguard’s revenue isn’t publicly declared, it’s thought that the company’s annual revenue was $9.4 billion in 2019 and dropped to $8.8 million for the next two years we have data for.

The firm’s unique client-owned structure, allows it to return profits and economies of scale to investors through lower fees that allow them to keep more of their returns. With no requirement to post quarterly results, Vanguard focuses on the long-term financial success of its shareholders in the financial markets. Through this structure, Vanguard claims that it can focus on offering its clients the best possible advice, investments, and retirement services.

Vanguard Group Returns

As of July 2024, Vanguard Group offered 423 funds worldwide. Several of Vanguard’s funds have a five-star rating from Morningstar. The Morningstar Rating measures funds against similar funds in terms of past performance.

Five of the most popular and their annual returns since 2019 include:

Who Owns Vanguard Group?

Vanguard Group’s ownership structure is unique for an investment firm. Since it was formed in 1975, Vanguard has been owned by its member funds, which are owned by investors. This means that Vanguard is wholly owned by its investors.

Its founder John C Bogle wanted to create a new and better type of mutual fund company. The company claims that its unusual structure enables it to focus fully on meeting the investment needs of its clients, providing low-cost, long-term investment options and unbiased financial advice.

“There’s an old saying, ‘Treat your customer like an owner,’ which is easy for us to do, because our clients are our owners. The Vanguard shareholders actually own Vanguard,” said John C Bogle.

Bogle believed in smart, long-term investment and wanted to lower fees for brokerage services as much as possible. Bogle has been widely credited with developing the first index fund for individual investors and, in 1999, he was named as one of the four investment giants of the twentieth century by Fortune Magazine.

Who is the Vanguard Group CEO?

Salim Ramji was appointed as Vanguard Group CEO in June 2024, succeeding Tim Buckley. Ramji has more than 25 years of experience in investment, capital markets, and wealth management, including serving in senior roles at BlackRock Inc. for 10 years.

Buckley’s retirement was announced in March 2024. His six-year tenure included a period of significant growth, with Vanguard reaching 50 million clients and managing to increase assets under management by 80%.

He also oversaw criticism of Vanguard Group’s approach to climate change, with the company taken to court by the Australian Securities and Investments Commission and scrutiny over its decision to pull out of the industry’s Net Zero Asset Managers initiative.

At the same time as Buckley’s retirement was announced, Vanguard also revealed that chief investment officer Greg Davis was also taking on the role of president of the investment and asset management firm.

Here’s a full list of all Vanguard Group’s CEOs:

Vanguard Group’s Company History

Vanguard Group, Inc. is a global leader in investment management, well-known for pioneering low-cost index funds for individual investors. As well as its popular funds, Vanguard offers brokerage services and financial planning advice.

Here’s a rundown of the group’s history since its inception in 1975.

1975-1995: John C Bogle’s Vision for Better Investing

John C Bogle graduated from Princeton University in 1951 and joined the Wellington Management Company. Following a badly ending merger, Bogle was fired from his role as president and CEO in 1974. It was at this point that he reached out to the Boards of the Wellington funds, which were largely unaffiliated with the Wellington Management Company, to propose mutualizing the funds and empowering them to operate on an at-cost basis.

This was an unusual move, but in August 1974 the fund directors agreed to form a new wholly-owned subsidiary called Vanguard.

The great thing about that mistake, which was shameful and inexcusable and a reflection of immaturity and confidence beyond what the facts justified, was that I learned a lot. And if I had not been fired then, there would not have been a Vanguard.

In 1975, Vanguard created a new kind of investment option with its first money market fund. Money market funds are an asset class that allows investors to earn a bigger yield than that offered by traditional bank savings accounts. By 1981, assets held in money market funds accounted for 36% of all Vanguard’s assets under management. The Vanguard Prime Money Market Fund was the largest, boasting $1.2 billion in total assets.

In 1976, Bogle went on to launch the passively managed First Index Investment Trust, now known as the Vanguard 500 Index Fund. It was one of the first mutual investment index funds and was modeled on the S&P 500 Stock Index. However, the fund failed to meet expectations on its initial public offering and the managing banks called for it to be cancelled.

Bogle was steadfast in his drive to create a better investment model. Vanguard’s asset growth finally began to pick up thanks to a bull market in 1982. The model also grew in popularity with copycat funds popping up elsewhere, but these were largely unsuccessful.

It was a significant period for Vanguard with a number of new funds launched, including:

• The Vanguard Primecap fund in partnership with Primecap in 1984.
• The Total Bond Fund in 1986 – the first bond index fund for individual investors.
• The Vanguard Extended Market Index Fund, an index fund of the whole stock market, bar the S&P 500, in 1987.

In 1983, Vanguard introduced a brokerage service that offered significant savings to investors who wanted to supplement their mutual fund holdings by investing more money in individual stocks and bonds. In 1986, Vanguard launched the first bond index fund in the industry, the Vanguard Total Bond Market Index Fund. This fund offered low-cost, diversified access to US-based investment bonds.

With funds performing well, Vanguard closed the top performers to new investors, limiting sales to existing shareholders. Its intention was to protect the interests of its investors by slowing asset growth in these funds to ensure long-term results. During the 1990s, several Vanguard funds grew to sit among the largest in the world.

1995-2008: Vanguard Expands its Product Offer and International Footprint

In 1995, Bogle announced that he was stepping down as CEO, with John Brennan named as his successor. A year later, Vanguard began to expand internationally, opening Vanguard Investments Australia. Over the following years, the company continued to expand overseas, setting up operations across Canada, China, Europe, and Mexico.

In 1996, Vanguard began to offer investment advice and financial planning services. Its highly affordable fee structures were seen as pioneering in the industry.

Recognizing that more investors were looking to align their portfolios with their personal beliefs and values, Vanguard launched the Vanguard Calvert Social Index Fund in 2000. This fund tracks the performance of US-based stocks that meet certain environmental, social, and corporate governance (ESG) criteria.

In the same year, Vanguard began to offer additional cost savings to its loyal clients through Admiral Shares. Admiral Shares offers expense ratios five to seven basis points lower than its standard investor shares.

In 2006, Vanguard reached a significant milestone, with assets under management exceeding $1 trillion for the first time.

2008-2024: Vanguard Makes Further Strides to Lower the Cost of Investing

F William McNabb III became president and CEO of Vanguard Group in 2008. The new leadership began to expand Vanguard’s offer away from its index mutual funds into other funds such as ETFs and actively managed funds.

In 2011, Vanguard created a new division designed to offer products, services, and education to financial advisors and broker-dealers. As of February 2023, Financial Advisor Services, as it is known, is Vanguard’s biggest client-serving division, with almost $3 trillion in assets under management.

Vanguard launched its first actively managed ETFs in the UK market in 2015, followed by Canada in 2016, and the USA in 2018. Still committed to lowering the cost of investing, Vanguard began to offer commission-free trading on ETFs, stocks, and options between 2018 and 2020.

In 2018, Vanguard’s chief investment officer Tim Buckley took over as CEO. In the same year, another bull market and unwavering investor loyalty helped Vanguard achieve assets under management of more than $5 trillion.

Vanguard’s 2021 acquisition of Just Invest was the firm’s first-ever acquisition, enabling Vanguard to offer personalized indexing tools and equip financial advisors with the technology they need to meet their clients’ needs.

“Financial advisors understand that each client’s circumstances and values are personal,” said Tom Rampulla, managing director of Vanguard Financial Advisor Services. “We are excited to integrate Just Invest’s personalized indexing offering into our intermediary business and help advisors unlock new ways to tailor client experiences and provide value.”

In 2024, Salim Ramji took over as CEO.

Vanguard Group Controversies

As with most high-profile global organizations, Vanguard Group has found itself linked to some controversies over the years. Here are some of the most notable:

COVID-19 Conspiracies

Vanguard has been central to a number of conspiracy theories. These theories often claim that Vanguard, along with other large investment firms like BlackRock, has significant influence over global events, including the COVID-19 pandemic.

However, these claims lack credible evidence, and while Vanguard manages trillions of dollars in assets, the money it manages belongs to individual and institutional investors. The influence of firms such as Vanguard is wildly overstated in conspiracy theories, which ignore the tight regulatory constraints they operate under.

Chinese Investments

In 2023, reports emerged that Vanguard funds had invested in Chinese companies that exposed US investors to links with the People’s Liberation Army. At a time when tensions between the US and Chinese governments were increasing, Senator Marco Rubio spoke out on the matter, saying: “China continues to exploit America’s capital markets, and firms like Vanguard help make that possible by funneling American dollars into Chinese companies.”

In response to the story, Vanguard Group stated that it “maintains the highest levels of compliance with all applicable laws and regulations, including sanctions law.”

Commitment to Environmental, Social, and Corporate Governance

Vanguard Group’s approach to climate change has been widely criticized. The firm caused uproar in 2022 when it announced its decision to pull out of the Net Zero Asset Managers initiative, an international coalition of asset managers aiming to support the move to net zero. Vanguard claimed that the decision was based on a desire to choose its investment options more freely and meet the needs of its fund holders.

In 2023, the firm’s Australian subsidiary was taken to court by the Australian Securities and Investments Commission amid claims of “greenwashing”. The regulator accused Vanguard of exaggerating the extent of its environmental, social, and governance screening applied to certain investments.

Vanguard Group was also named in a 2023 report as the planet’s leading investor in fossil fuels with major companies such as Exonnmobil in its portfolio.

Along with BlackRock and State Street, in 2023 Vanguard was accused of a failure to apply its significant influence in tackling serious human rights issues. An investigation led by a responsible investment charity analyzed the biggest asset managers in the world to assess how they address a range of issues, including workers’ rights and public health. It found that the Big Three all performed poorly, with Vanguard rated 66th out of the 77 the organizations assessed.

Unexpected Tax Bills for Investors

Vanguard faced controversy for causing unexpectedly high tax bills for investors with certain retirement funds known as target-date mutual funds. These funds are designed to gradually become lower-risk as investors get closer to retirement age. The scandal arose in 2020 when Vanguard lowered its minimum investment amount for the lower cost of two from $100 million to $5 million.

This change caused many investors to switch from the more expensive fund. This mass exodus meant that Vanguard was forced to sell a reported 15% of the assets in the higher-cost fund to raise cash so it could redeem shares for investors.

If a mutual fund makes a profit by selling assets, the capital gains are passed on to the fund’s shareholders. As a result, investors in the more expensive funds received 40 times more capital gains than in previous years. Those who held the funds in a taxable brokerage account, instead of a tax-advantaged individual retirement account or 401(k), incurred unexpectedly high tax bills for 2021.

Vanguard finally settled the matter by agreeing to a payout of $6.25 million.

What Can We Learn From Vanguard Group?

Vanguard Group’s net worth growth, although not directly quantifiable, gives us several lessons about how to ensure long-term success in the financial industry.

Vanguard is recognized for its low-cost approach to investing, which has proven to be a significant competitive advantage. By focusing on index funds with minimal fees, Vanguard attracted millions of investors seeking affordable, diversified portfolios. This strategy highlights the power of offering value and a unique proposition to customers to help build long-term loyalty and growth.

Vanguard’s unique ownership structure, where the investors in its funds also own the company, allows it to prioritize client interests over shareholder profits, a lesson in aligning business objectives with customer needs. However, while Vanguard’s client-first strategy has driven growth, there have been criticisms of its passive management approach, particularly around its investment in industries with negative environmental and social impacts​.

As Vanguard continues to expand its influence, maintaining an ethical investment portfolio and responding to global sustainability concerns will be critical. Vanguard’s story emphasizes the importance of scaling businesses responsibly and being clear on your corporate values.

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