It Pays to Run Vanguard, But How Much?
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Thursday, June 19, 2014

It Pays to Run Vanguard, But How Much?

The Vanguard team prides itself on being a low-cost provider, but that doesn't mean it doesn't pay to be on top of that team. Yet it doesn't pay as much as it might.

In his Barron's "Focus on Funds" column, Brendan Conway shines a light on the giant, low-cost mutual fund giant's internal, profit-sharing partnership plan, citing a report by Vanguard watcher Dan Wiener. Wiener notes that, since Vanguard chairman and CEO Bill McNabb took over six years ago, Vanguard's AUM has skyrocketed by 133 percent, while the plan's dividends have risen by 60 percent.

The just-announced 2013 dividend for the plan is up 12 percent from the 2012 one, yet the S&P 500 rose 25.2 percent in 2013. So Vanguard is sharing the wealth with its employees (especially its top ones), but they could be doing even more so.

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