Of the investor. By the investor. For the investor. Since 1975.

An open letter to investors

May 01, 2025 Salim Ramji Chief Executive Officer of Vanguard

Taking a stand for investors for 50 years Lowering cost matters to performance – in index and active portfolios Extending The Vanguard Effect to fixed income and cash savings Investing to lead in client experience Democratizing advice and investor choice Thank you for your trust

My fellow Vanguard investor, Fifty years ago today, Jack Bogle started a different kind of investment firm—one owned by its investors, ensuring a focus on making money for them, not from them.1

Video length: 1 minute 05 seconds

Read the transcript John C. Bogle: What made Vanguard different from everybody else in this industry was the structure that I picked in the first place, way back in 1974. We are owned by the shareholders. Our mission is to serve them and not some outside management company owner. And I don't think it's self-serving to say that we are a company that is of the shareholder, by the shareholder, and for the shareholder, with a crew that understands that and implements it really quite beautifully. People are the key to everything we do and everything we ever have done. I've often talked about human beings being the hallmark of this operation—people that care about our values, people that care about our integrity, each with their own hopes and fears and financial goals. Vanguard was founded on the ideal that all investors deserve a fair shake—that investing ought to be lower-cost and more accessible. Bogle’s idealism was audacious at the time. In 1975, investing was reserved for the very wealthy and was stubbornly expensive, and the U.S. stock market was down by half over the prior couple years. The "Vanguard experiment" did not take off right away, but as generations of crew persistently took action to bring us closer to our founding ideals, more people were attracted to what we had to offer. Today, more than 50 million investors have entrusted Vanguard with their financial hopes—a responsibility we embrace with great care. I am writing first to thank you for your trust in Vanguard. It is a trust that demands our constant effort, especially given the market fluctuations this year. So, I also want to highlight actions we are taking to serve your needs today and for the long term. Finally, I offer our unwavering commitment that Vanguard will always be your firm, one that takes a stand for your needs and where our focus is on your long-term investment success.

One of Bogle’s contrarian insights was that in investing, you get what you don’t pay for. The less you pay for your funds, the more you keep. A benefit of being a Vanguard investor-owner is that as we realize greater economies of scale, we pass those savings on to you through lower fees. It is why Vanguard has reduced expense ratios more than two thousand times. Our relentless focus on fees is also why this February we announced the largest expense ratio cuts in our history—we expect our U.S. investors to save more than $350 million this year alone.2 The Vanguard Effect has also spurred price competition across the industry, as our low-cost offerings draw attention to the importance of fees to long-term results.

Annual cost of hypothetical $10,000 investments3 Sources: Vanguard and Morningstar, Inc. as of December 31, 2024. Bogle’s insight was contrarian because lower cost portfolios tend to outperform higher cost ones—in index and active.4 Skilled, low-fee active managers can be more prudent and disciplined than higher-fee managers who can feel compelled to take on greater risk to offset their higher fees. This is the main reason why Vanguard’s index and active funds have outperformed over the past decade.

Ten years ended December 31, 2024 Sources: Vanguard, based on data from LSEG Lipper.

If the market turmoil of the past few months has highlighted one thing, it is the importance of diversification—especially between stocks and bonds. Bonds can be sound diversifiers and, as Vanguard’s long-term outlook indicates, they can be good sources of return and income—which is especially important if you are retired. The bond market is significantly larger than the stock market and much more complex and inefficient, providing greater opportunities for active management to outperform. But competitors’ fees for active fixed income have remained persistently high. You deserve a better deal.6 At Vanguard we have been managing fixed income portfolios for forty years. Our combination of high skill and low fees (a quarter of the industry average) has resulted in 92% of our active fixed income funds outperforming their peer group averages over the last 10 years.7 You also deserve a better deal on cash savings. Vanguard’s money market funds already provide strong performance at low fees but, you probably also hold traditional savings accounts—whether for the convenience of paying bills or FDIC insurance. But the typical savings account yields less than half a percent. Knowing we could do far better than that, we launched our Cash Plus offer. At present, it pays 3.65%, nearly 9x what you could earn with the average savings account, and it includes features like the ability to pay bills and FDIC insurance.8 In two years, a Cash Plus account with a $10,000 balance could have earned nearly $1,000 more with our bank sweep program than with a traditional bank savings account.9 Beyond extending The Vanguard Effect to fixed income and cash, we are expanding our long-standing alliances with third-party managers to provide better access to institutional-quality private assets and guaranteed income solutions — as we believe they can play a role in certain long-term portfolios. We are at work developing solutions for your needs and will have more to announce on that front later this year.

Spending time with clients and crew since I joined Vanguard last year, I’ve heard firsthand your frustration when our service hasn’t met your expectations. It’s something we have been focused on improving and our efforts are beginning to shine through. Our client satisfaction ranks number one according to the JD Power 2025 U.S. Do-it-Yourself Investor Satisfaction Study released last month.10 We have nearly completed modernizing our personal investor technology, moving off legacy mainframe systems to cloud computing, and we expect to be in a similar position with workplace retirement in about a year. This means you can count on our technology to be much more responsive and resilient, and for your digital experience to be improving at a much swifter pace. To meet and stay ahead of your needs—we’ve more than doubled our technology investments over the past five years. In 2025, we will invest $3 billion in our platforms and capabilities, including artificial intelligence, digital channels, and phone and chat services, to ensure we serve you well.

We recently stood up a new Advice & Wealth Management group. We have been offering advice for over a decade and see it as central to helping investors reach their goals. Our new group is a response to more investors wanting us to scale our offering and expand in specialized areas like tax and estate planning. Last fall, we lowered the investment minimum to $100 for our award-winning U.S. Digital Advisor service.11 We are also bringing our tradition of low fees to advice, offering high quality, full-service advisors for an annual fee of 0.3%—roughly a quarter of the industry average.12 We seek to democratize more than advice—including how you vote the shares of the companies you own through Vanguard funds. For the 2025 proxy voting season, our pioneering Vanguard Investor Choice program will apply to $250 billion in assets, nearly double our 2024 program pilot.