Taking a stand for investors for 50 years

My fellow Vanguard investor,

Fifty years ago today, Jack Bogle started a different kind of investment firm—one owned by its investors, ensuring a focus on making money for them, not from them.¹

 

Vanguard was founded on the ideal that all investors deserve a fair shake—that investing ought to be lower-cost and more accessible. Bogle’s idealism was audacious at the time. In 1975, investing was reserved for the very wealthy and was stubbornly expensive, and the U.S. stock market was down by half over the prior couple years.

The “Vanguard experiment” did not take off right away, but as generations of crew persistently took action to bring us closer to our founding ideals, more people were attracted to what we had to offer. Today, more than 50 million investors have entrusted Vanguard with their financial hopes—a responsibility we embrace with great care.

I am writing first to thank you for your trust in Vanguard. It is a trust that demands our constant effort, especially given the market fluctuations this year. So, I also want to highlight actions we are taking to serve your needs today and for the long term. Finally, I offer our unwavering commitment that Vanguard will always be your firm, one that takes a stand for your needs and where our focus is on your long-term investment success.

Lowering cost matters to performance – in index and active portfolios

One of Bogle’s contrarian insights was that in investing, you get what you don’t pay for. The less you pay for your funds, the more you keep. A benefit of being a Vanguard investor-owner is that as we realize greater economies of scale, we pass those savings on to you through lower fees.

It is why Vanguard has reduced expense ratios more than two thousand times. Our relentless focus on fees is also why this February we announced the largest expense ratio cuts in our history—we expect our U.S. investors to save more than $350 million this year alone.² The Vanguard Effect has also spurred price competition across the industry, as our low-cost offerings draw attention to the importance of fees to long-term results.

Helping investors keep more of their returns

Annual cost of hypothetical $10,000 investments³

Bogle’s insight was contrarian because lower cost portfolios tend to outperform higher cost ones—in index and active.⁴ Skilled, low-fee active managers can be more prudent and disciplined than higher-fee managers who can feel compelled to take on greater risk to offset their higher fees. This is the main reason why Vanguard’s index and active funds have outperformed over the past decade.

Percentage of Vanguard funds that have outperformed the competition⁵

Ten years ended December 31, 2024 

_{Sources: Vanguard, based on data from LSEG Lipper.}

Extending The Vanguard Effect to fixed income and cash savings

If the market turmoil of the past few months has highlighted one thing, it is the importance of diversification—especially between stocks and bonds. Bonds can be sound diversifiers and, as Vanguard’s long-term outlook indicates, they can be good sources of return and income—which is especially important if you are retired.

The bond market is significantly larger than the stock market and much more complex and inefficient, providing greater opportunities for active management to outperform. But competitors’ fees for active fixed income have remained persistently high. You deserve a better deal.⁶

At Vanguard we have been managing fixed income portfolios for forty years. Our combination of high skill and low fees (a quarter of the industry average) has resulted in 92% of our active fixed income funds outperforming their peer group averages over the last 10 years.⁷

You also deserve a better deal on cash savings. Vanguard’s money market funds already provide strong performance at low fees but, you probably also hold traditional savings accounts—whether for the convenience of paying bills or FDIC insurance. But the typical savings account yields less than half a percent.

Knowing we could do far better than that, we launched our Cash Plus Account. At present, it pays 3.65%, nearly 9x what you could earn with the average savings account, and it includes features like the ability to pay bills and FDIC insurance.⁸ In two years, a  Cash Plus account with a $10,000 balance could have earned nearly $1,000 more with our bank sweep program than with a traditional bank savings account.⁹

Beyond extending The Vanguard Effect to fixed income and cash, we are expanding our long-standing alliances with third-party managers to provide better access to institutional-quality private assets and guaranteed income solutions — as we believe they can play a role in certain long-term portfolios. We are at work developing solutions for your needs and will have more to announce on that front later this year.

Investing to lead in client experience

Spending time with clients and crew since I joined Vanguard last year, I’ve heard firsthand your frustration when our service hasn’t met your expectations.

It’s something we have been focused on improving and our efforts are beginning to shine through. Our client satisfaction ranks number one according to the JD Power 2025 U.S. Do-it-Yourself Investor Satisfaction Study released last month.¹⁰ We have nearly completed modernizing our personal investor technology, moving off legacy mainframe systems to cloud computing, and we expect to be in a similar position with workplace retirement in about a year. This means you can count on our technology to be much more responsive and resilient, and for your digital experience to be improving at a much swifter pace.

To meet and stay ahead of your needs—we’ve more than doubled our technology investments over the past five years. In 2025, we will invest $3 billion in our platforms and capabilities, including artificial intelligence, digital channels, and phone and chat services, to ensure we serve you well.

Democratizing advice and investor choice

We recently stood up a new Advice & Wealth Management group. We have been offering advice for over a decade and see it as central to helping investors reach their goals. The new group is a response to more investors wanting us to scale our offering and expand in specialized areas like tax and estate planning.

Last fall, we lowered the investment minimum to $100 for our award-winning U.S. Digital Advisor service.¹¹ We are also bringing our tradition of low fees to advice, offering high quality, full-service advisors for an annual fee of 0.3%—roughly a quarter of the industry average.¹²

We seek to democratize more than advice—including how you vote the shares of the companies you own through Vanguard funds. For the 2025 proxy voting season, our pioneering Vanguard Investor Choice program will apply to $250 billion in assets, nearly double our 2024 program pilot.

Thank you for your trust

Jack Bogle founded Vanguard because he believed it was possible for people to invest for the long term, with simplicity and integrity, and at low cost. Fifty years later, all of us crew members at Vanguard see ourselves as stewards of this mission.

Even as the current economic outlook and markets are in a state of flux, I want to reassure you that our mission—to give you the best chance for investment success—is steadfast. We are also evolving, taking action to ensure we remain zealous in the pursuit of your success.

Thank you for entrusting Vanguard with your hard-earned savings. I look forward to reporting back to you next year on our progress.

_{¹ Vanguard is owned by its funds, which are owned by Vanguard’s fund shareholder clients.}

_{²Comparison uses AUM as of 11/2024. There is no guarantee that any individual investor will save money due to the reductions in expense ratios. Figures are estimates and should not be relied on. For illustrative purposes only. See corporate.vanguard.com/feecuts for details.}

_{³Data assume that a pair of constant $10,000 portfolios are invested in Vanguard funds and non-Vanguard funds and divided to reflect the relative market share of each fund, based on its actual assets under management over time. Data reflect actual fund expense ratios of all U.S.-domiciled mutual funds and exchange-traded funds, as of December 31, 2024.} 

_{⁴See, for example, Considerations for index fund investing, Vanguard, August 2024.}

_{⁵For the ten-year period ended December 31, 2024, 6 of 6 Vanguard money market funds, 70 of 97 bond funds, 21 of 23 balanced funds, and 168 of 191 stock funds, or 265 of 317 Vanguard funds overall, outperformed their peer group averages. Results will vary for other time periods. Only U.S.-domiciled funds with a minimum ten-year history were included in the comparison. The competitive performance data shown represent past performance, which is not a guarantee of future results. All investments are subject to risks. For the most recent performance, visit vanguard.com/performance.}

_{⁶ The dollar-weighted average expense ratio for actively managed, non-Vanguard fixed income mutual funds and ETFs is 0.53%, more than five times the equivalent Vanguard expense ratio of 0.10%. Source: Vanguard calculations using Morningstar data. Expense ratios weighted by assets as of November 30, 2024.}

_{⁷ For the ten-year period ended December 31, 2024, 6 of 6 Vanguard money market funds and 40 of 44 actively managed bond funds, or 46 of 50 Vanguard active fixed income funds overall, outperformed their peer group averages. Results will vary for other time periods. Only funds with a minimum ten-year history were included in the comparison. The competitive performance data shown represent past performance, which is not a guarantee of future results. All investments are subject to risks. For the most recent performance, visit vanguard.com/performance.}

_{⁸ The Vanguard Cash Plus Account program APY (annual percentage yield) is 3.65% as of April 30, 2025. The APY will vary and may change at any time. Source for average bank savings yield of 0.41%: FDIC National Rates and Rate Caps as of April 21, 2025. Cash Plus bank sweep program APY is current as of date of publication. Current APY is available at vanguard.com. The Vanguard Cash Plus Account is a brokerage account offered by Vanguard Brokerage Services, a division of Vanguard Marketing Corporation, member FINRA. Some third-party institutions may not accept the Cash Plus Account routing number for transactions. If you have any issues using the routing number on a third-party website, contact the provider. There may be other material differences between these products that must be considered prior to investing.}

_{Bank Sweep program balances are held at one or more Program Banks, earn a variable rate of interest, and are not securities covered by SIPC.  They are not cash balances held by Vanguard Brokerage Services (VBS), a division of Vanguard Marketing Corporation (VMC); VMC is not a bank. Balances are eligible for FDIC insurance subject to applicable limits. See the list of participating Program Banks.}

_{⁹ Source: Vanguard and FDIC National Rates and Rate Caps. This example is for illustrative purposes only and does not represent the return on any particular investment. It assumes a $10,000 investment, no additional transactions are made and factors in compounding. It is based on an estimate of total interest earned during the period May 24, 2022, through December 30, 2024, using the Vanguard Cash Plus bank sweep program’s actual daily APY (annual percentage yield will vary and may change at any time). For savings accounts, the applicable monthly APY according to FDIC National Rates and Rate caps was used as the daily APY for each month presented (During this time the average APY rate for Savings was 0.46%, and the Cash Plus Account was 4.15%.) There may be other material differences between these products that must be considered prior to investing, including the level of risk associated with each product type. Past performance is no guarantee of future results.} 

_{¹⁰ The J.D. Power 2025 U.S. Investor Satisfaction Study surveyed approximately 4,000 self-directed investors. Vanguard previously secured the number 1 ranking in 2021, 2022, and 2023, and the number 2 ranking in 2024. The survey was fielded between January and December 2024 and measured satisfaction in seven key dimensions on a 1,000-point scale: product and service offerings meet investors’ needs; ease in doing business with the firm; digital channels; people; value for fees paid; and level of trust with the firm. For J.D. Power 2025 award information, visit jdpower.com/awards. Use of study results in promotional materials is subject to a license fee; no compensation was provided for award consideration.}

_{¹¹ Vanguard received the first overall ranking in Morningstar's 2025 "Robo-Advisor Report" among 15 other robo-advisors selected by Morningstar. Morningstar evaluated each provider across the following weighted criteria as of December 2024, to determine their rankings: total price (30%); the process used to select investments, construct portfolios, and match portfolios with investors (30%); the parent organization behind the digital platform (20%); and breadth of services (20%). Additional details about Morningstar's methodology are available on its website (https://www.morningstar.com/specials/your-guide-to-getting-started-with-robo-investing). Current fees may vary for Vanguard advisory services and the other robo-advisors considered. Although Vanguard compensates Morningstar for marketing services, Morningstar's opinions and evaluations are independent and unrelated to the selection of Vanguard for this ranking. Following the independent announcement of this ranking, Vanguard purchased a license from Morningstar for the right to include this rating in Vanguard marketing. Source: “2025 Robo-Advisor Report" by Dan Culloton, et al.  ©2025 Morningstar, Inc. All rights reserved.}

_{¹² According to Cerulli research, the industry average asset-based advisory fee ranges from 1.25% for a client with $100,000 in investable assets to 0.67% for a client with $10 million. Advisory fees exclude products’ embedded management fees and are self-reported by advisors. Source: Cerulli Associates. The Cerulli Edge: The Americas Asset and Wealth Management Edition: The Fees Issue, March 2025.} 

_{Vanguard Personal Advisor Select and Vanguard Personal Advisor Wealth Management charge fees based on a tiered fee schedule (maximum 0.30%) calculated as an average advisory fee on all advised assets. Vanguard Digital Advisor charges Vanguard Brokerage Accounts an annual gross advisory fee of 0.20% for its all-index investment options and 0.25% for an active/index mix. Vanguard Personal Advisor charges Vanguard Brokerage Accounts an annual gross advisory fee of 0.35% for its all-index investment options and 0.40% for an active/index mix. Vanguard Digital Advisor and Vanguard Personal Advisor reduce those fees by the amount of revenue that Vanguard (or a Vanguard affiliate) retains from your portfolio in order to calculate your net advisory fee. Note that this fee doesn't include investment expense ratios charged by a fund, such as fees paid to the funds' third-party managers which are not credited. While we generally recommend using low-cost Vanguard funds to build your portfolio, actively managed funds will have higher expense ratios than index funds. Please review each service's advisory brochure for more fee information. You should consult your plan fee disclosure notice for the applicable annual gross advisory fees that apply to your 401(k) account.}