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Absolutely correct. Also, in the case of Vanguard, they're known as an "At-Cost" company. This means that they take no profit from the investors, and instead wi
by Vinalin 9y ago
Absolutely correct. Also, in the case of Vanguard, they're known as an "At-Cost" company. This means that they take no profit from the investors, and instead will return any excess money in the form of higher returns. This makes it very difficult to operate a profitable business in this space.
- Jonnax 9y agoHow does their business model work then? Subscription fees?
- dx034 9y agoThey're essentially not-for-profit. So no business model other than serving clients and covering costs.
- Mindless2112 9y agoVanguard is structured as a mutual company; it is owned by funds managed by the company, and is therefore owned by its customers. [1] So its owners have no incentive to increase fees in order to increase profits. Actually, Vanguard has been sued over this [2][3] -- the claim essentially being that Vanguard ought to owe taxes on those profits that it didn't earn from fees that it didn't charge. [1] https://en.wikipedia.org/wiki/The_Vanguard_Group https://en.wikipedia.org/wiki/The_Vanguard_Group [2] https://www.nytimes.com/2016/02/07/your-money/vanguard-a-champion-of-low-fees-faces-a-peculiar-tax-challenge.html?mcubz=0 https://www.nytimes.com/2016/02/07/your-money/vanguard-a-cha... [3] https://news.ycombinator.com/item?id=11081550 https://news.ycombinator.com/item?id=11081550