Vanguard Attracts Record New Money as Investors Flock to Passive

It’s another record for Vanguard Group.

The firm, which has grown to become the world’s largest mutual fund manager by offering low-cost investments, attracted $148 billion in new client money during the first six months of 2016, surpassing its previous first-half record of $140 billion set last year, a spokesman said in an e-mail on Tuesday. In June alone, about $30 billion flooded into the firm’s mutual funds and exchange-traded products.

The Valley Forge, Pennsylvania-based firm is benefiting from a growing preference for low-cost vehicles that track indexes as investors lose faith in the ability of active managers to beat the market. Vanguard has slashed fees to as low as 1 cent per $100 invested, and Chief Executive Officer Bill McNabb said he’s prepared to cut further.

“Their cost advantage means if you’re looking for low cost funds, they’re pretty tough to beat — they’re kind of the default answer in passive,” Russel Kinnel, director of manager research at Chicago-based Morningstar Inc., said of Vanguard. “Their active funds have continued to be popular as well, a lot’s going in their favor.”