Vanguard too popular?

[edro]

Nearly every financial website or adviser I have seen recommends Vanguard due to their low fee structure.

Is anyone else slightly worried by their popularity?

 

[Charmonium]

I know that in the past, funds that have become too popular, like Peter Lynch's Fidelity funds, would often close the fund to new investment. But I think those were actively managed funds so it would make sense to do that if you couldn't fine enough good opportunities to invest in.

But Vanguard, as far as I know, is exclusively a passive fund. That's why their fees are so low - very little 'churn.' I guess it could be a problem if you have a lot of people trying to take money out of a fund since then they have to sell some of the underlying securities to cover. The same could be true if you had too much inflow but then the problem would be overbidding for those same assets.

 

[kranky]

Vanguard does have both actively managed and index (passive) funds. Some people complain that they don't have the snazziest website or features. That's OK with me, I'm happy with the lowest fees.

 

[Markbnj]

They own their own management company, and the management company charges lower fees than the industry norm because it's a captive. I'm a fan, since I have money in Vanguard index funds, but I know they are getting sued over it by some lawyers who think they are basically competing unfairly by owning the management company.

Btw, Vanguard has a really long history, and is a descendant of one of the original, if not the original mutual funds.

 

[yh125d]

I don't really know anything about any of this stuff, but I know my 401 with Voya is -6% since inception, and my Roth with Vanguard is only -.02%, both are in similar index funds.

 

[brianmanahan]

not really

they're only slightly more popular than fidelity, which i use as well as vanguard

 

[Charmonium]

I have a gold mutual fund with Voya that for some reason they converted to an energy fund - I think when they separated from ING. Personally I wouldn't have anything to do with them again. Same goes for Prudential. Both are ripoffs.

I've done pretty well with T Rowe Price though.

 

[11thHour]

They have plenty of fat that could be trimmed, as there are a ton of vanguard funds but far from all of them are good performers.

 

[KB]

Bring on the popularity! The more money vanguard brings in, the lower their fees go. They have lowered the fee for the s& p 500 fund several times since I have been in it.
Typically when a fund gets too much money, an active managers performance will suffer because they begin taking riskier bets. Index funds have no such problem.