Pimco Total Return lagged behind 56 percent of peers this year and beat 77 percent over the past five years, according to data compiled by Bloomberg.
The Vanguard fund was buoyed by a 27 percent return in the CRSP US Total Market Index this year, a benchmark that includes stocks of different market capitalizations.
Vanguard, the biggest U.S. mutual-fund firm, with almost $2.4 trillion in U.S. fund assets, has grown as the champion of indexing. Index funds represent 63 percent of Vanguard assets, Woerth said. Company founder John Bogle argued that most investors can’t beat the market and advised them to buy low-cost funds that track indexes. Vanguard also offers funds in which the managers pick stocks and bonds.
Vanguard Total Stock Market Index Fund more than tripled in size since the end of 2008.
Indexing has also grown with the popularity of exchange- traded funds, nearly all of which mimic indexes and can be traded throughout the day like stocks. Vanguard is the third largest U.S. provider of ETFs, behind Boston-based State Street Corp. and New York-based BlackRock Inc., Morningstar data show.