Vanguard Active Management versus Vanguard Passive Management

A prominent Vanguard observer claims that certain of Vanguard's actively managed funds have sharply outperformed their passive index counterparts over ten year periods.I just found this out and sorry I didn't find it sooner.

Let's test this. The test will use published returns from Vanguard's website as follows:

Here are the funds:

Index	Vanguard Health Care Index Fund Admiral Shares (VHCIX)
Active	Vanguard Health Care Fund Admiral Shares (VGHAX)
Index	Vanguard Extended Market Index Fund Admiral Shares(VEXAX)
Active	Vanguard Capital Opportunity Fund Admiral Shares(VHCAX)
Index	500 Index Fund Admiral Shares (VFIAX)
Active	Vanguard PRIMECAP Fund Admiral Shares (VPMAX)
Index	Vanguard Dividend Appreciation Index Fund Admiral Shares (VDADX)
Active	Vanguard Dividend Growth Fund (VDIGX) CLOSED

Here are the returns as of January 31, 2018:

		1 Year	3 Year	5 Year	10 Year	Since	Inception
Index	VHCIX	28.18%	10.34%	17.84%	12.83%	10.27%	2/5/2004
Active	VGHAX	22.35%	8.12%	17.42%	12.74%	11.00%	11/12/2001
Index	VEXAX	19.52%	11.82%	13.84%	10.35%	8.44%	11/13/2000
Active	VHCAX	33.05%	16.52%	19.85%	12.34%	11.71%	11/12/2001
Index	VFIAX	26.36%	14.62%	15.87%	9.77%	6.43%	11/13/2000
Active	VPMAX	34.27%	16.91%	19.61%	12.35%	11.12%	11/12/2001
Index	VDADX	26.11%	13.39%	—	—	11.80%	12/19/2013
Active	VDIGX	23.65%	12.38%	14.05%	10.12%	8.72%	5/15/1992

Conclusion:

Well, how interesting. While this is an unscientific comparison (we would need to look at the universe of ALL active to index funds to do that), prima facie,Vanguard seems to be able to outdo itself. Three of the four actively managed funds beat their index: VHCAX, VPMAX and VDIGX (although this last one is closed to new investors). Good job, Vanguard!

Feel free to post comments.

Disclaimer: The above is not investment advice, is for information purposes only, may be subject to change without notice, and, while prepared with care, may be subject to omissions and errors