The combination of the terms “Wall Street” and “forgoing profit” in the same sentence might sound like an oxymoron. However, Valley Forge’s Vanguard has proved through its constant growth that this combination is not only possible, but highly successful, writes  Allan Sloan for The Washington Post.

A lot has been written over Vanguard’s four decades of growth into the multi-trillion-dollar Wall Street presence it is today, but there are still some little known facts.  

1. The company was not designed to outperform the S&P 500, but to mimic it. It is much cheaper to run a fund which replicates an index than it is to run an active fund which has to spend additional resources on analysts and managers.
2. The amount Vanguard charges has also dropped drastically over the years. An investment of $10,000 in 1976 would have generated a management fee of $49 a year, comprised of a $6 annual charge and 0.43 of one percent of the average balance. Today, that same size of investment has a fee of just $5.
3. Not only that, but fees for investments under $10,000 have fallen over the same period with a $3,000 investment today incurring a fee of 0.16 percent, or $4.80 compared to $12.90 in 1976.
4. As a result, a passive Vanguard index fund will often outperform an average actively managed fund simply because it charges significantly less. The more the company reduced fees, the higher its funds ranked in terms of shareholder-return.
5. Finally, Vanguard forces other companies to lower their fees to stay competitive. Fidelity, for example, has reduced its fees for accounts less than $3,000 to 0.09 percent on its S&P 500 fund, and to 0.45 percent for accounts over $10,000.

Read more about Vanguard’s journey to the top at The Washington Post here, and check out previous VISTA Today coverage of Vanguard here.