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A comment on The rise of passive investors. Parent comment

Re:The rise of passive investors by Vinalin on Thursday July 20, 2017 @07:49AM (#14811604)
Absolutely correct. Also, in the case of Vanguard, they're known as an "At-Cost" company. This means that they take no profit from the investors, and instead will return any excess money in the form of higher returns. This makes it very difficult to operate a profitable business in this space.
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Re:The rise of passive investors by Jonnax on Thursday July 20, 2017 @08:16AM (#14811768)
How does their business model work then? Subscription fees?
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Re:The rise of passive investors by Mindless2112 on Thursday July 20, 2017 @10:06AM (#14812525)
Vanguard is structured as a mutual company; it is owned by funds managed by the company, and is therefore owned by its customers. [1] So its owners have no incentive to increase fees in order to increase profits.

Actually, Vanguard has been sued over this [2][3] -- the claim essentially being that Vanguard ought to owe taxes on those profits that it didn't earn from fees that it didn't charge.

[1] https://en.wikipedia.org/wiki/The_Vanguard_Group [2] https://www.nytimes.com/2016/02/07/your-money/vanguard-a-cha... [3] https://news.ycombinator.com/item?id=11081550

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Re:The rise of passive investors by dx034 on Thursday July 20, 2017 @08:21AM (#14811809)
They're essentially not-for-profit. So no business model other than serving clients and covering costs.
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