The previously announced decision by Vanguard Group Chief Executive John Brennan to step down from the day-to-day running of the Valley Forge, Pa.- based fund giant and indexing pioneer moved a step closer to fruition on Friday.

Vanguard's board announced it has decided to make F. William McNabb III its CEO effective August 31. Under the transition plan announced in February, McNabb will succeed Brennan, who has served as Vanguard CEO since 1996. He ascended to the position after replacing founder John Bogle. (See previous story here.)

McNabb, 51, joined Vanguard in June 1986 and has held various senior leadership positions during his 22-year career, including directing Vanguard's retail and institutional divisions. According to Vanguard, he will "assume day-to-day responsibilities for all aspects of Vanguard's operations."

Brennan, 54, will remain as chairman of the Vanguard board and the Vanguard funds, and will continue to be involved in strategic business and fund management issues, according to a company statement.

His stunning decision to step aside, which caught analysts and investors alike by surprise, has been much discussed in the industry. But Brennan had long indicated he didn't want to spend his whole life in one job. He has also said since that the shift is out of a desire to move on to other challenges and spend more time with his family and friends.

Brennan is also known to be a big believer in the concept of bringing in fresh ideas and keeping management talent motivated.

Vanguard manages nearly $1.25 trillion in U.S. mutual fund assets, including more than $360 billion in employer-sponsored retirement plans. Vanguard offers more than 150 funds to U.S. investors and more than 50 additional funds in non-U.S. markets.