Vanguard has focused on the passive indexing route because of greater difficulty for active management to squeeze out value. According to the Standard & Poor’s Indices Versus Active Fund Scorecard, or SPIVA, about 60% to 69% of active U.S. stock funds underperformed their benchmarks over the past 12 months through mid-2013.
“Our view is own the market. And over a long period of time, if you own the market at very low cost you’ll actually outperform,” McNabb said.
For more information on ETF indices, visit our indexing category.
Max Chen contributed to this article.