Why tracker funds are in the vanguard

There's more to fund manager Vanguard’s success than the trend towards trackers and passive investing, says Piper Terrett.

"More and more investors understand that the less you pay, the more you keep," as Michael Rawson of Morningstar puts it. Hence the rise of fund-management firm Vanguard, the global leader in low-cost passive investing (passive funds seek to track the market, rather than beat it).

Last year, Vanguard generated $215bn of new business in America a record in asset management. It could top that by 40% this year, says Stephen Foley in the Financial Times. The firm now accounts for 20% of the American fund industry. Globally it boasts $3.4trn in assets under management (second only to BlackRock).

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Piper Terrett is a financial journalist and author. Piper graduated from Newnham College, Cambridge, in 1997 and worked for Germaine Greer and for Adam Faith’s Money Channel before embarking on a career in business journalism. 

She has worked for most top financial titles, including Investors Chronicle, Shares magazine, Yahoo! Finance and MSN Money. She lectures part-time at London Metropolitan University and is the author of four books.