Vanguard has moved on from its late founder John Bogle. Some things have changed on the surface, but its direction remains largely the same.

How it achieved its current status, and the challenges it has faced along the way, are directly tied to what founder John Bogle and Vanguard sought to accomplish.

Humble beginnings

Almost 30 years ago, author Robert Slater wrote one of the most detailed accounts of Vanguard’s first two decades as a mutual fund company: John Bogle and the Vanguard Experiment. Slater’s experiment referred to the existential questions surrounding Vanguard’s earliest days and founder John Bogle’s mission to disrupt the asset management industry for the betterment of its clients.

Vanguard, enabled by its unique mutual ownership structure, won clients’ trust over the subsequent 50 years. It eliminated distribution fees, cut expense ratios, introduced some of the first index funds for small investors, and pioneered a unique exchange-traded fund share class that its competitors are eager to copy. The investments it offers are cheaper, more tax-efficient, and feature a higher quality of management than most of its rivals.

Over the decades, competition forced others to clean up their act, cut fees, and improve the quality of their investments. The effect has been so pronounced that analysts and pundits simply refer to it as ‘the Vanguard effect.’ Every investor, whether they are a Vanguard client or not, has benefited from its mission and existence.

Those investor-friendly practices have worked in Vanguard’s favor. It has grown into the second-largest asset manager in the world and was responsible for roughly $10 trillion of investors’ money globally at the end of 2024. It oversaw about 28% of all money invested by Americans through mutual funds and ETFs—an unprecedented achievement.

Yet, it continues to grow. Every year it takes in hundreds of billions of dollars while money is leaving many of its competitors.

Growing pains

All that success hasn’t been smooth sailing. Vanguard created hundreds of investments over the decades. Some never really caught on and were eventually shut down. Such instances have been few and far between. The underlying strategies were often well-intentioned, so it’s difficult to frown too harshly on those errors.

Another criticism stems from its massive size and reach. Collectively, Vanguard’s mutual funds and ETFs own a meaningful stake in most publicly traded companies, which has raised questions about its influence over those businesses.

To be fair, other large asset managers have earned the same scrutiny, and Vanguard finds itself in that situation because its investments are popular with clients. But that doesn’t absolve Vanguard of any responsibilities or concerns related to its large positions. So far, it has navigated those situations by striking agreements with regulators that allow its funds to continue holding shares of certain regulated companies. Those agreements usually restrict the scope of Vanguard’s engagement activities, while its clients continue to receive the investments they were promised.

More recently, loyal clients have pointed toward a decline in services. Long wait times to speak with service reps, restrictions on limit orders for small trades, changes to their default cost-basis method, and a fee increase for trades conducted through the service desk have irked and annoyed some. Such changes are small in the grander scheme, but they have caused some to question Vanguard’s motives. Other clients have left.

Some of the criticism is understandable. Vanguard raised the bar, and clients expect it to meet a high standard, but such changes aren’t haphazard. They’re often done out of a need to cope with the increasing number of clients that Vanguard is trying to accommodate within its low-cost operating model.

To put the situation into context, Vanguard had a little over 20 million clients in 2015. Its numbers had swelled to more than 50 million just 10 years later. That didn’t happen by accident. Many investors figured out that Vanguard was offering them a great deal, and they signed on.

Such problems are the cost of success. They’re good problems to have, but they’re still problems.

Vanguard 2.0

The Vanguard experiment continues today, but it’s testing a different hypothesis: Can Vanguard continue its mission while juggling the new challenges that come from its massive size?

Some of Vanguard’s recent actions suggest it’s tackling those challenges by shifting resources away from slow-growing projects or those with smaller payoffs to those that have become more pressing. A few years ago it departed with approximately 1,300 of its crew through a partnership with Infosys to handle its 401(k) administration in the United States. It sold its outsourced chief investment officer business to Mercer in March 2024 and its individual 401(k) business to Acensus later in the same year. Likewise, recent efforts to expand into China and build an ETF platform in Germany didn’t work out, and Vanguard left those projects abruptly.

Meanwhile, it has consistently poured more time, money, and effort into its technology upgrades, client experience, and its growing advice business. All need to expand and improve if Vanguard wants to thrive and compete.

Vanguard’s new era also has a new leader. Last year, its board appointed former BlackRock executive Salim Ramji to the CEO post. Some had questioned Vanguard’s decision to hire an outsider, let alone one who came from a competitor. Vanguard’s prior CEOs had always come from within Vanguard. That said, Ramji’s indexing and wealth management experience align with Vanguard’s priorities.

So far, Ramji has continued to carry the torch. He’s consistently reiterated Vanguard’s push into bond funds—an effort that is about a decade old and becoming more apparent through Vanguard’s newest ETFs. Notably, it has started offering more actively managed bond ETFs—an attempt to bring the Vanguard effect to an asset class where active managers have historically performed better against passive investments.

Fee cuts are still a priority at Vanguard, despite most of its managed funds and ETFs sporting some of the lowest expense ratios in their respective categories. It made its largest round of fee cuts in early February 2025 when it lowered the expense ratios on 168 share classes of 87 funds. A typical share class saw its expense ratio decline by a little more than 0.01%, but that adds up to a big bill when applied to all those share classes. Vanguard estimated the cuts would save its clients in those share classes close to $350 million for the remaining 11 months of 2025. That sent a clear signal that it is still willing to part with a decent chunk of its revenue to grind its low expense ratios even lower.

Another recent initiative raised questions about Vanguard’s direction. It announced a partnership with Wellington and Blackstone in mid-2025 to create multi-asset investments that mix public and private assets. It was the first indication that Vanguard, like many of its competitors, was starting to venture into the world of private asset investments. The announcement was peculiar because the culture around private assets doesn’t exactly sync with the smaller investors that Vanguard has always prioritised.

To Vanguard’s credit, it hasn’t rushed to offer any such investments, and its leadership is aware of its unique risks and pitfalls. Right now, its endeavor into private assets doesn’t appear to be the big priority that it has become at other asset managers.

It’s too early to judge what this means for Vanguard and its clients. It’s also a great opportunity for Vanguard to demonstrate its unique investor-first culture. Right now, Vanguard is still sailing in the right direction. Will it continue to make client interests its top priority? Only Vanguard’s leadership can answer that question.

This article originally appeared on our US website.

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