Passive investment giant Vanguard outstrips combined rivals
US investment company Vanguard's unprecedented exchange traded fund (ETF) inflows are dwarfing its rivals, with investors ploughing $823bn into the company over the past three years, compared to $97bn for the 4,000 other firms in the sector, while in the past seven years, Vanguard's total assets under management have risen from $1tn to $4.2tn over the past seven years. The company says its success is down to low-cost ETFs, along with a rigid approach to cost-cutting, though Karin A Risi, who oversees Vanguard’s retail investor group, admits the penny-pinching has led to "operational challenges".
MALVERN, Pa. — The Vanguard trading floor is the epicenter of one of the great financial revolutions of modern times, yet it is a surprisingly relaxed place.

A few men and women gaze at Bloomberg terminals. There is a muted television or two and a view of verdant suburban Philadelphia. No one is barking orders to buy or sell stock. For a $4.2 trillion mutual fund giant that is still growing rapidly, it occupies a small fraction of the space of a typical Wall Street trading hub.

You can barely hear the quiet hum of money being invested — money in scarcely imaginable quantities, pouring into low-cost index mutual funds and exchange-traded funds (E.T.F.s) that track financial markets.

In the last three calendar years, investors sank $823 billion into Vanguard funds, the company says. The scale of that inflow becomes clear when it is compared with the rest of the mutual fund industry — more than 4,000 firms in total. All of them combined took in just a net $97 billion during that period, Morningstar data shows. Vanguard, in other words, scooped up about 8.5 times as much money as all of its competitors.