As a follow-up to my ideas on Ought to I Stick with Vanguard? and their latest expense ratio drop announcement, I lately listened to this 30-minute Morningstar video with Daniel Sotiroff and Susan Dziubinski concerning the present state of Vanguard in 2025. I feel it offered some good extra context. Listed here are some highlights and temporary commentary.
Vanguard funds introduced in one other web $222 billion final yr, with the ETFs up $306 billion however the mutual funds dropping $84 billion. The Vanguard S&P 500 ETF introduced in $117 billion all by itself. Vanguard holds over $10 trillion in property whole. General, they don’t seem to be struggling in any respect.
Nonetheless, with the mutual funds following the trade tendencies and nonetheless dropping property, mutual fund holders ought to be cautious of them being compelled to promote positions and create capital features distributions. This contains foremost their actively-managed mutual funds however probably finally their Goal Retirement 20XX Funds.
Vanguard is rolling out a variety of new bond ETFs. Vanguard Core Tax-Exempt Bond ETF (VCRM), a broad US muni-bond ETF. Vanguard Brief Period Tax-Exempt Bond ETF (VSDM), a short-term US muni-bond ETF. Each ETFs launched November 2024.
Coming in 2025 are the low-cost index ETFs that maintain T-Payments: Vanguard 0-3 Month Treasury Invoice ETF (VBIL) and the Vanguard Extremely-Brief Treasury ETF (VGUS). Then there’s Vanguard Brief Period Bond ETF (VSDB), which is actively-managed and can maintain short-term bonds throughout a number of bond sectors.
Vanguard is splitting off their Wealth and Recommendation division fully. It can now be utterly separate from the Private Buyers division, displaying how necessary it’s to the present firm. Heading this division shall be Joanna Rotenberg, most lately employed on the wealth recommendation division of Constancy Investments. As an on a regular basis Vanguard buyer, I’m continually seeing their recommendation adverts to satisfy with an advisor, however I’m nonetheless ready for them to truly make the product helpful. With all these new executives, I assume I’ll have to present them a minimum of one other yr or two to determine it out. Rely me as hopeful on this one.
The brand new CEO from BlackRock, Salim Ramji, has additionally acknowledged a need to give attention to serving to retires to create earnings from their portfolios. The drawdown interval is one other huge downside within the trade, which I don’t assume anybody else has solved but both. In truth, making a secure paycheck is even more durable than simply rising your portfolio over time and accepting the volatility. Rely me as skeptical on this entrance.
There may be an upcoming digital Joint Particular Assembly of Shareholders on February 26, 2025. Appears like instance of “Oh, the fund holders personal the corporate and get a say in issues!”, however after trying on the fund proxy vote , it seems to be like the standard nothing-burger. There’s solely one actual query on the proxy vote card (the second is “You gonna go to the assembly?”). They’ve already picked the alternative trustees that they need; it’s not prefer it’s an election the place persons are operating with totally different platforms. You mainly vote for all of them, or withhold your vote towards all of them. Given the large institutional holders, I don’t even know if each retail investor voted “towards all” that it could truly forestall any of their chosen picks from becoming a member of the board.
Picture credit score to Canva AI “HMS Vanguard on hopeful seas at dawn”