Assets under management at the world's largest mutual fund company are rising faster than its profit-sharing payments, which in turn have grown faster than the markets.

Dan Wiener of the Independent Adviser for Vanguard Investors, reports that the 2014 Partnership Plan dividend for Vanguard [profile] employees will rise 13 percent year-over-year, to $165.57. Yet the low-cost mutual fund titan's three-year AUM growth rate (which the board uses to figure out the dividend) is 73 percent, the highest such figure since 2000.

Wiener notes that Vanguard founder Jack Bogle created the dividend in 1984. Since then, the dividend has multiplied by more than 48, even as shares in the Vanguard 500 Index Fund have multiplied by 24. So, Vanguard's profit-sharing plan growth is outpacing market growth, yet its AUM growth is outpacing both its profit-sharing growth and market growth.

Vanguard's board, Wiener points out, avoided matching the profit-sharing dividend growth rate to Vanguard's AUM growth (and thus avoided locking in the growth for future calculations) by paying a special, one-time, "40th Anniversary" dividend to the crew.

Fun fact: Wiener estimates that, if Bogle and Jack Brennan (Brennan's now-also-retired successor atop Vanguard) were still on the team, they would get $16.8 million and $9.6 million each, respectively, from their 2014 Partnership Plan dividends. 

Edited by: Neil Anderson, Managing Editor


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