How Vanguard Stacks Up Against Its Fund Industry Peers

Morningstar’s Fund Family 150 Digest is here to help investors evaluate the largest fund families in the US. The 2025 edition illustrates the ways the asset management industry is evolving to compete with low-cost passive investments that continue to attract investors, as well as classic due diligence considerations like the Morningstar Medalist Rating, the Morningstar Rating for funds, and fees.

Market Concentration Persists in the US Fund Industry, Particularly Among Passive Managers

The US fund industry remains highly concentrated among the largest players. Overall, Vanguard, BlackRock, and Fidelity manage about 50% of fund assets under management in the US. Capital Group, mostly through its American Funds lineup, oversees an additional 8% of AUM.

Bifurcating the US fund industry into two buckets—active funds, which consume roughly USD 15.2 trillion, and passive funds, which total about USD 18 trillion—shows that both segments are top-heavy, but just a few firms truly dominate on the passive side. The top five active managers, including primarily passive Vanguard, hold 46% of active AUM. (The numbers in the exhibit total 47% due to rounding.) The top five passive managers, meanwhile, comprise a whopping 89% of passive AUM.

Market Concentration: Active vs. Passive

Morningstar Research. Data as of Aug. 31, 2025. Includes US-domiciled open-end and exchange-traded funds. Excludes funds of funds, feeder funds, and money market funds.

Vanguard itself manages nearly half of all passive AUM. The firm has long been a low-cost leader, and its focus on a range of core building blocks means its funds earn larger allocations in investor portfolios.

ETFs Are Increasingly the Vehicle of Choice

Although most of the largest firms for exchange-traded fund assets have significant passive businesses, ETFs are increasingly the vehicle of choice for active strategies, too.

Dimensional and JPMorgan stand out as two of the largest providers of active ETFs, though their paths to this point differed. Dimensional saw success in converting mutual funds to ETFs, and its recent approval from the Securities and Exchange Commission to offer ETF share classes means it is likely the firm’s ETF business will continue to grow. On the other hand, JPMorgan Equity Premium Income ETF JEPI garnered significant investor demand in its first five years on the market to become the firm’s fourth-largest fund by August 2025.

Looking ahead, the SEC’s approval of Dimensional’s exemptive relief for ETFs as a share class means that, in time, many more ETF share classes are to come.

High-Rated Parent Firms Offer Stability and Well-Priced Funds

Morningstar’s Manager Research analysts assign Parent ratings to more than 100 of the 150 largest firms in the US. Only 10 of them earn analysts’ greatest conviction and a High Parent rating. (Boston Trust Walden and Wellington Management also earn High Parent ratings, but neither is among the largest 150 by US fund AUM. Wellington has considerable assets through its Vanguard subadvisory relationship, however.) Morningstar’s Parent rating comprises 10% of each underlying fund’s Morningstar Medalist Rating.

Analysts consider a variety of factors in their Parent assessments, including a firm’s ability to attract, develop, and retain investment talent; approach to succession planning; risk management; product development; and fee philosophy, among other things.

Generally, firms with High Parent ratings have stable investment teams, as demonstrated by a high manager retention figure. (Firms with large passive suites, like Vanguard, tend to name index-fund managers to many funds, so their retention numbers take a larger hit when someone leaves.)

Success ratios consider both survivorship and performance. Focused firms like Primecap, Fiduciary Management, and Jensen can see significant changes in success rates across different time periods, as their funds’ performance tends to be highly correlated. Meanwhile, MFS has generally endured performance struggles over the past five years. That firm has a more diversified lineup by investment style, but its conservative approach to valuation means the funds can miss out when a theme or sector runs.

High-rated Parent firms also tend to offer investors a good deal overall, compared with the competition. Here, the Average Fee Level - Peer Group considers both open-end mutual funds and ETFs and differentiates between active and passive approaches as well as Morningstar Categories.

Low Fees Boost Morningstar Medalist Ratings for Vanguard

Among funds offered by the 10 largest firms in the US, investors have a plethora of promising options, and Vanguard leads the pack.

Morningstar assigns forward-looking Morningstar Medalist Ratings to convey the manager research team’s confidence in a strategy’s ability to outperform its category index after fees. Ratings range from Gold to Negative, and funds rated Gold, Silver, and Bronze are all expected to outperform. The exhibit below shows the percentage of each firm’s fund offerings that earn higher ratings under the Medalist Rating framework.

At nine of the 10 largest firms, more than 50% of share classes earn Gold, Silver, or Bronze Medalist Ratings. This is impressive considering that, on average within the 150 largest firms, less than 40% of assets are in higher-rated share classes.

Manager Investment Signals Investor Alignment and Portfolio-Manager Conviction

When portfolio managers invest in their charges, they create a shared experience with fundholders and indicate conviction, not only in their own strategies and skills but also in their firm’s ability and willingness to provide support. Recent Morningstar research found that high levels of manager ownership remain rare across the industry, yet there is a positive relationship between those firms with strong manager ownership and higher subsequent average success ratios.

The exhibit below shows the percentage of assets in funds where at least one named portfolio manager invests at least USD 1 million for the 10 largest firms. Capital Group tops the chart: 98% of its US AUM is in funds that have at least one portfolio manager invested at the highest level.

At the other end of the spectrum, high levels of investment by passive and systematic managers are less common. At these firms, managers are often named to a broad swath of funds, so their investments could be more spread out, falling short of the USD 1 million mark, or concentrated in a small number of funds. Vanguard leads among predominantly passive firms, with 27% of AUM in funds with strong co-investment.

Although just outside of the top 10 in terms of assets, Dodge & Cox stands out: 100% of its US AUM is invested in funds that have at least one portfolio manager with at least USD 1 million invested. What’s more, in most of its funds, each of the named managers (not just one) invests at least USD 1 million.

Download the full reports here: US Fund Family Digest, European Fund Family Digest, and Canadian Fund Family Digest.