Vanguard's Active Funds Beat their Benchmarks

10 Pages Posted: 24 Jan 2023

See all articles by Edward Tower

Edward Tower

Duke University - Department of Economics

Date Written: January 21, 2023


Jack Bogle, Vanguard’s founder, argued that high expenses and turnover doom mutual funds to inferior returns. This is generally true. In this paper I explore whether this is also true of Vanguard’s actively managed mutual funds. Much of Vanguard’s reputation rests on its index funds. Should its Active funds get equal or even greater respect? I find that
• Vanguard’s active funds on average over-return their benchmarks.
• Vanguard’s active funds that act like passive funds with below median expense ratios and turnover have higher excess returns than those with above median expense ratios and turnover.

Keywords: Vanguard mutual funds, Active Management, Index Mutual Funds

JEL Classification: G11, G14

Suggested Citation

Tower, Edward, Vanguard's Active Funds Beat their Benchmarks (January 21, 2023). Available at SSRN: or

Edward Tower (Contact Author)

Duke University - Department of Economics ( email )

213 Social Sciences Building
Box 90097
Durham, NC 27708-0204
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919-660-1818 (Phone)
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