2023 was generally a profitable year for investors—only three of Vanguard’s funds finished in the red. With 500 Index (VFIAX) gaining 26.2%, the flagship index fund exited bear market territory. Foreign stocks posted solid returns, with Total International Stock Index returning 15.5%. Bonds snapped a two-year losing streak, as Total Bond Market Index (VBTLX) gained 5.7%.
Vanguard expanded its bond ETF lineup in 2023, launched a promising foreign stock fund and shut down two complex funds—Managed Allocation and Alternative Strategies.
Exiting the Net Zero Asset Manager alliance in late 2022 didn’t put the ESG question to rest. Throughout 2023, Vanguard faced pressure from both sides of the political spectrum over its ESG practices.
Vanguard exited or announced it was closing several different business lines in 2023. Vanguard is exiting China, closing a business in Germany, ending its partnership with Amex and selling its OCIO business (Vanguard Institutional Advisory Services).
I hope these moves help free up Vanguard's capacity to refocus on its original customer—the individual investor. Because (let’s be honest) Vanguard’s customer service and technology disappointed again in 2023. We deserve better.
I sincerely hope 2024 is the year I get to write about how Vanguard’s service has dramatically improved—I’m not holding my breath, though.
You can find my 2024 Outlook, The Last Shall Be First, here. I’ll follow up with a deeper look at how the markets fared in 2023, but here are the events that caught my attention throughout the year:
JANUARY
Tesla’s stock falls 12% on the first trading day of the year … For the first time in 100 years, the House fails to elect a speaker on the first ballot. Eventually, Kevin McCarthy wins on the 15th vote … ISM’s service report falls below 50 (signaling contraction) for the first time outside of the COVID shutdowns since 2009 … Inflation (CPI) clocks in at 6.5% … The U.S. hits the debt ceiling, and the U.S. Treasury begins to use “extraordinary measures” to keep paying bills … After 15 months, Vanguard opens Multi-Sector Income to all investors … The first report indicates the economy (GDP) grew at a 2.9% annual rate in the 4th quarter … Sam Martinez, a co-manager on the Investment-Grade funds, Core Bond and others, steps away from his portfolio manager duties. TOP FUND: Advice Select International Growth, 17.8%. WORST: Utilities ETF, -1.6%.