Vanguard’s marketing efforts in its United States home market is paying dividends, with the group attracting a record $US48.9 billion to its US stock and bond mutual funds in 1998.
This figure surpassed the previous mark set in 1993 by chief rival Fidelity Investments.
Vanguard, the second-biggest US player in terms of funds under management behind Fidelity, took in more than four times as much money as Fidelity in 1998, according to US research house Financial Research. Fidelity finished third behind Vanguard and Putnam Investments for 1998 inflows.
“The strength of Vanguard’s brand-name is obvious in that four of the 10 best-selling funds in the industry last year were Vanguard funds,” says Financial Research analyst Michael Evans.
Almost 75 per cent of Vanguard’s net new investments flowed into its stock funds, led by the Vanguard Index 500, which took in about $US9.44 billion.
Fidelity’s stock and bond funds took in a net $US11.3 billion, only about a quarter of 1993’s total of $US45.3 billion. The overall performance of Fidelity’s funds improved although investors still seemed to be reacting to its below-average returns of 1996, when its flagship Magellan Fund lagged the major indexes after a losing bet on bonds.
Fidelity is still America’s biggest mutual fund company, controlling about 14.2 percent of the $US3.7 trillion US managed-fund market. Vanguard holds a 10.5 percent market share.
Putnam, the fourth-biggest fund company, recorded 1998’s second largest inflow with net $US12.8 billion last year, including almost $2.6 billion into its Investors Fund. However, Putnam’s fund inflows were down about 40 per cent from 1997.
1998 US top-ten net inflows ($US billion)
Company 1998 1997
Vanguard Group 48.9 38.0
Putnam Investments 12.8 21.8
Fidelity Investments 11.3 15.9
MFS Investment Mgmt 11.1 5.59
Capital Group 10.9 12.6
Pimco Advisors 9.96 3.36
Janus Capital 9.01 7.19
Alliance Capital Mgmt 6.51 2.59
Oppenheimer Funds 6.35 7.46
Charles Schwab 4.54 2.70
Source: Financial Research
