A new Morningstar report argues Vanguard has drifted away from founder Jack Bogle's vision, pointing to slower customer service and a push into advice, actively managed funds, and even private equity. Our Managing Principal, Daren Blonski, offered a different read to Financial Advisor magazine for its article "Morningstar Suggests Vanguard Has Strayed Far From Jack Bogle's Vision". "Vanguard hasn't wandered off course as much as they are just being forced to evolve," he said. "They realized they have to give clients what they want. Why would I pay Vanguard 30 basis points for advice if all I get is index funds?" In his view, investors are asking for alternative and actively managed investments, and Vanguard is simply responding to that demand.
Key Takeaways
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A Morningstar report criticized Vanguard for moving into advice, actively managed funds, and private equity, arguing it strayed from Jack Bogle's low-cost index-fund roots.
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Daren's take: this isn't Vanguard abandoning its mission, it's Vanguard adapting to what clients are actually asking for.
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Paying 30 basis points for advice only makes sense if that advice includes more than plain index funds, which is part of why Vanguard has expanded its offerings.
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Investor demand for alternative investments and active management is real, and firms across the industry, not just Vanguard, are responding to it.
Helping clients figure out where index funds end and where alternative or actively managed strategies make sense is a big part of what we do. Learn more about our Investment Management services.