Vanguard is best-selling fund manager of 2016

10.01.2017 / 15:53

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Vanguard has topped a table of the bestselling fund managers globally for 2016 after drawing nearly $200bn from investors, eclipsing the total amount of new money raised by its 10 nearest competitors.
The Pennsylvania-based asset manager has benefited from the runaway success of its low-cost sales strategy, which has dealt a serious blow to pricier rivals in the active investment industry.

Amundi, the French fund house, was the second-bestselling asset manager, pulling in $35bn over the same period — roughly a sixth of Vanguard’s haul, according to figures compiled for FTfm by Morningstar, the data provider.

Timothy Strauts, markets research manager at Morningstar, said: “Vanguard is eating the rest of the US fund industry. It is dominating completely. Both its active and passive businesses are doing very well, mainly because [it charges] very low fees.“I can guarantee you Vanguard will be the biggest selling [company] of 2017. The US market is all about fees and if you don’t have low fees, you don’t get flows.”

Dimensional, the Texas-based asset manager, was the third-bestselling fund house, with $23bn of inflows, according to the data, which excluded flows to exchange traded funds. Including ETFs, Vanguard’s total was even bigger at $288bn.

Justin Bates, an analyst at Liberum, the brokerage, said: “To see such inflows at Vanguard bodes ominously for fees and profitability for active managers and for the industry as a whole.
“We are looking at an industry that is less profitable than it ever has been, relatively speaking. The Vanguard oil tanker is just going to continue driving forward, destroying almost everything in its wake.”

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Vanguard is owned by its clients, rather than shareholders, enabling the company to repeatedly cut fees as its assets under management grow.

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Vanguard is best-selling fund manager of 2016

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