I want to let you in on a shocking secret about Vanguard: they’re great active investors.
That’s right. The people almost everyone looks to for low-fee index funds are, in fact, top-flight stock pickers.
Take the actively managed Vanguard Windsor Fund Investor Shares (VWNDX): since inception way back in 1958, it’s returned an annualized 11.4%, despite being long only large cap value stocks (and avoiding more volatile small caps entirely).
Compare that to the passive Vanguard Total Stock Market Fund (VTSAX). Despite the index fund’s lower fees (which first-level investors love and Vanguard touts as a key to superior returns), VWNDX has crushed VTSAX since the latter’s launch in the early 2000s:
Index Investors Get What They Pay For