Vanguard Investors Profited

April 1, 2026

(In February 2026, Morningstar finished acquiring the Securities Price Research Center (CRSP). This organization sponsors numerous equity indexes, some of which Vanguard utilizes for its funds and ETFs. While this business relationship isn’t the reason for discussing Vanguard funds in this article, it’s worth mentioning that a potential conflict of interest exists.)

As of the end of 2016, the total net assets for Vanguard’s funds and ETFs stood at about $2.9 trillion. Over the subsequent decade, these funds attracted roughly $2.1 trillion in new investments. By the close of December 2025, the assets had surged to $9.9 trillion, accounting for nearly $5 trillion in returns and profits during that time.

I could be mistaken, but it’s hard to argue that this represents the largest return in the fund’s history. Two key factors seem to have contributed to this outcome.

Cooked stock
Investors have enjoyed significant participation in those profits

Cooked stock

Vanguard’s equity funds, on an asset-weighted basis, delivered an annual return of 12.6% over the decade leading up to December 31, 2025. If we set aside cash flows, this equated to a profit of around $4.6 trillion.

Overall, it appears that Vanguard’s entire array of funds and ETFs, inclusive of stocks, bonds, and alternative investments, achieved a 10.5% annual return on an asset-weighted basis over the last ten years, culminating in a total net gain of $5 trillion.

Investors also participate

Other major fund families, like BlackRock and Fidelity, might also make similar claims. They, too, have stock funds that have yielded impressive returns over the past decade.

However, what seems to differentiate Vanguard is that its investors have mostly stuck with the existing strategy, thereby reaping a larger share of the profits. A comparison of the dollar-weighted returns—considering the timing and size of cash flows—against the fund’s overall time-weighted returns illustrates this contrast for each year in the past decade.

My findings showed that the average “timing gap” for Vanguard funds in recent years was about 1%. Sure, this may sound considerable, but it makes up only about 10% of the fund’s strong total time-weighted returns. So, investors are capturing more of the fund’s overall gains than we’ve noticed in other analyses.

To better understand how participants in defined contribution plans fared, I did further research, focusing on fund share classes held by Vanguard’s target-date funds over the last ten years. These funds are often default options in 401(k) plans and serve well as indicators of participant outcomes.

Fortunately, we discovered that the gap was even narrower, averaging just around 0.4% annually. This suggests that the typical dollar allocated to these target-date funds captured nearly all of their total returns throughout the decade.

Conclusion

Investors in Vanguard appear to have increased their net income by roughly $5 trillion over the last ten years, expanding their stakes in these funds. This might just be an unprecedented amount for a single fund family.

This trend aligns with the stock market’s overall rise, which has generated substantial profits. Moreover, it likely stems from the consistent purchasing and holding habits of Vanguard investors throughout the decade leading up to December 31, 2025. By doing so, they’ve sidestepped costly trading missteps, thereby capturing nearly all the funds’ overall returns.

Switch on

Here’s what else I’ve been reading, watching, and listening to:

Understanding what you’re diving into is crucial with semi-liquid funds
- Also, the “music stopped” in the private market
Will AI undermine competitive advantage? The answer is yes and no.
Alan Ross shares his thoughts: “Don’t be misled by these three investment tips.”
“Einstein’s Layoff,” a piece by Owen Lamont.
Thinking about dramatically changing your portfolio based on current events? That’s generally a bad idea.
Check out “Knight of the Seven Kingdoms.”
Listening to Sigur Ros’ “Grosori.”