Vanguard Investors Cleaned Up

(Disclosure: In February 2026, Morningstar acquired the Center for Research in Security Prices. CRSP is the sponsor of various equity indexes, some of which Vanguard licenses for use by its funds and exchange-traded funds. Although that commercial relationship didn’t inform my choice to write about Vanguard’s funds and ETFs in this article, it’s a potential conflict of interest you should be aware of, nonetheless.)

On Dec. 31, 2016, Vanguard’s funds and exchange-traded funds held around $2.9 trillion in net assets. Over the next 10 years, those funds and ETFs gathered about $2.1 trillion in net inflows. Given these funds and ETFs finished with $9.9 trillion of net assets as of Dec. 31, 2025, it means they racked up nearly $5 trillion of income and gains over the decade.

I could be wrong, but I’m pretty sure that’s the biggest haul in fund history. And it happened for two simple reasons:

1. Stocks cooked
2. Investors partook in nearly all those gains

Stocks Cooked

On an asset-weighted basis, Vanguard’s equity funds returned 12.6% per year over the decade ended Dec. 31, 2025. Ignoring flows, this translated to roughly $4.6 trillion in gains.

All told, I estimate Vanguard’s entire fleet of funds and ETFs—spanning stocks, bonds, and alternatives—gained 10.5% per year on an asset-weighted basis over this 10-year period. That amounted to $5 trillion in net income and appreciation.

Investors Partook

Other large fund families, such as BlackRock and Fidelity, could make similar claims. Like Vanguard, they run huge stock funds that clocked excellent returns in absolute terms over the past decade.

But what appears to have set Vanguard apart is its fund investors largely staying put and, thus, participating more fully in their gains. This becomes evident when we compare Vanguard investors’ estimated dollar-weighted return—which takes the timing and magnitude of their cash flows into account—to the funds’ aggregate time-weighted return. I did so for each of the calendar years that comprised this 10-year span.

What I found is that the average “timing gap” for the Vanguard funds in these years was around 1%. While that might seem wide, it only accounts for around 10% of the funds’ lofty aggregate time-weighted returns, meaning investors are earning more of their funds’ total returns than we’ve observed in other studies we’ve conducted.

To get a sense of how defined-contribution plan participants have fared, I ran an additional analysis, but this time limited it to the fund share classes that were held by Vanguard’s target-date funds over this decade. Those target-date funds are frequently the default option of 401(k) plans, making them a good proxy for the outcomes participants have achieved.

Encouragingly, I found the gaps were even smaller—only about 0.4% per year, on average. Meaning the average dollar invested in these funds, via the target-date strategies, captured nearly their entire aggregate total return over the decade.

Conclusion

Vanguard investors appear to have cleaned up over the past decade, notching around $5 trillion in net income and appreciation on their fund investments. That’s likely a record haul for investors in one fund family.

That reflects a rising stock market, which conferred trillions in gains. But it’s also partly attributable to Vanguard investors’ steadfastness, as they bought and largely held over the decade ended Dec. 31, 2025. In so doing, they appear to have avoided costly trading errors, thereby capturing nearly all those funds’ aggregate total returns.

Switched On

Here are other things I’m reading, watching, or listening to:

• Success with semiliquid funds means knowing what you’re getting yourself into
  • Also: “The music has stopped in private markets”
• Does AI shatter competitive advantages? Yes and no.
• Allan Roth: “Don’t Be Fooled by These 3 Investing Tricks”
• “Einstein’s Layoffs” by Owen Lamont
• Making big portfolio changes based on current events? Bad idea.
• Ser Dunc: “A Knight of the Seven Kingdoms”
• Sigur Ros “Glosoli”

Don’t Be a Stranger

I love hearing from you. Have some feedback? An angle for an article? Email me at jeffrey.ptak@morningstar.com. If you’re so inclined, you can also follow me on Twitter/X at @syouth1, and I do some odds-and-ends writing on a Substack called Basis Pointing.