In investing, no one is perfect. Advisors occasionally make mistakes. Retail market participants take losses in unadvised accounts (to be sure they also hit some winners). Even the legendary Warren Buffett has fessed up to some “turkeys.”
Clearly, no one bats .1000 in this game, but there’s value in learning lessons and not all of the valuable lessons are taught by legends or folks managing billions of dollars. Sometimes, the best tutorials can be taught by investors we perceive as being just like us.
With that in mind, there may be wisdom in paying attention to what Vanguard clients are doing. This isn’t about “copy trading” and the implication isn’t that Vanguard investors are somehow superior to those allocating assets to competing firms. However, something is going right at Vanguard and it’s to the benefit of the firm’s clients.
As Mornigstar’s Jeffrey Ptak points out, the Pennsylvania-based asset manager’s various products – ETFs, index funds, mutual funds, etc. – had $2.1 trillion in combined assets under management as of the end of 2016. That figure swelled to $9.9 trillion as of Dec. 31, 2025, help by capital appreciation, income and inflows.
Vanguard Investors Acknowledged an Important Lesson
In their own right, Vanguard investors appear to have learned an important in their own right. That being market timing is for the birds and that time in the market is really what matters. Said differently, Vanguard investors have a tendency to stay the course and it’s to their benefit.
“All told, I estimate Vanguard’s entire fleet of funds and ETFs—spanning stocks, bonds, and alternatives—gained 10.5% per year on an asset-weighted basis over this 10-year period,” notes Ptak. “That amounted to $5 trillion in net income and appreciation.”
A strong case can be made that Vanguard clients’ stick-to-itiveness is simply result of experience. By some estimates, the “average” Vanguard accountholder is in their 50s or 60s. Sure, that’s probably skewed higher due to Vanguard’s strong footprint in 401(k) market (some younger workers aren’t yet capitalizing on employer-sponsored plans), but the broader point is Vanguard clients have been around awhile and have seen plenty of market calamity.
They know that staying the course usually works out in their favor and selling low is bad news. To be sure, these traits are shared by clients of other firms, such as Fidelity, Schwab and others and it speaks to the point that while there’s nothing wrong per se with the youthful crowd over at Robinhood, the “kids” can learn some lessons from their older friends at Vanguard.
Staying Put for the ‘W’
If we’re going to nitpick, it’s fair to say – Ptak acknowledges as much – that much of Vanguard’s asset growth over the past decade was powered by mostly strong domestic equity markets during that period.
On the inflows front, it certainly helps that Vanguard is synonymous with low costs. For better or worse, many retail investors (some advisors, too) think the cheapest funds are the best funds and that’s advantageous for issuers of low-cost products. Still, Vanguard clients deserve some credit and there’s a lesson to be learned here.
“What appears to have set Vanguard apart is its fund investors largely staying put and, thus, participating more fully in their gains,” concludes Ptak. “This becomes evident when we compare Vanguard investors’ estimated dollar-weighted return—which takes the timing and magnitude of their cash flows into account—to the funds’ aggregate time-weighted return.”
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