Mon, 30 Jan 2017
In 2016, Vanguard captured more net inflows than the rest of the global fund industry combined.
Jeremy Glaser: Morningstar recently compiled its 2016 global fund flows data.
This year had a striking feature. One firm, Vanguard, had more net inflows globally than the rest of the fund industry combined.
The milestone was driven first by another strong year of flows for Vanguard funds. They didn't quite eclipse the record levels seen in 2014, but flows were still $43 billion higher than 2015 levels. Second, there was a dramatic slowdown in net inflows from all other firms, which have slowed from over $1 trillion in 2014 all the way to only $244 billion last year.
So what's driving investors to Vanguard? One word: costs. Morningstar research has shown that fees are one of the best predictors of good long-term performance. It seems that investors have caught on, and they are looking to Vanguard given its position as the low-cost provider for fund management.