The year 2020 joins 1929, 1987, 2000, and 2008 as periods that truly tested the mettle of active fund managers. But 2020 was unique in that the financial markets saw both lows and highs, with a steep drop in March followed by a remarkably rapid recovery.
Despite that extra volatility, Vanguard's active managers were still able to deliver value to our investors, and those efforts were acknowledged once again in a high ranking from Barron's Best Fund Families of 2020.
Vanguard is the only firm to rank among the top 10 for one-year performance four years straight—essentially the entire period that Barron's restricted its annual rankings to actively managed funds only. (Before 2017, the report included both active and index funds.)
This consistency extends to longer-term records as well, as Vanguard's combination of talent, discipline, and unique structural alignment to clients continues to help drive stellar results for our fund shareholders:
- For the fourth straight year, Vanguard ranked number one for five-year performance.
- For the third time in four years, Vanguard ranked first for 10-year performance.
The Barron's report cited several Vanguard funds by name across asset classes and noted that 83% of Vanguard's active fixed income funds beat their benchmarks in 2020.* It also noted that 2020 was unusual in another sense, with several funds managing to deliver higher returns with less risk. This is exactly what our active fixed income aims to do.
But whether equity or fixed income, active or passive, patience is the key for long-term success for both asset manager and investor.
How Barron's ranks the fund families
Barron's aim is to measure manager skill, independent of expenses beyond annual management fees. It calculates returns before any 12b-1 fees are deducted. Similarly, fund loads, or sales charges, aren't included in the calculation of returns.
Each fund's performance is measured against all of the other funds in its Refinitiv Lipper category, with a percentile ranking of 100 being the highest and 1 the lowest. This result is then weighted by asset size, relative to the fund family's other assets in its general classification. If a family's biggest funds do well, that boosts its overall ranking; poor performance in its biggest funds hurts a firm's ranking.
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