Vanguard generally owns stocks in their funds on behalf of people. Those people can chose to e.g. vote their share and if the business is sold (e.g.) will get their share. This is still ownership.
I'm not sure why the capital gains argument matters here. If the business can return money to shareholders in a way that increases their capital then they'll prefer to do so (e.g. via stock buybacks) but that benefits the fractional owner the same way it benefits the large owner.
It's true that if you own 0.0001% of a business you have very little influence about how it is run in the day to day. But the value of your investment is still anchored to the value of the business in exactly the same way as the larger owners are.
I'm not sure why the capital gains argument matters here. If the business can return money to shareholders in a way that increases their capital then they'll prefer to do so (e.g. via stock buybacks) but that benefits the fractional owner the same way it benefits the large owner.
It's true that if you own 0.0001% of a business you have very little influence about how it is run in the day to day. But the value of your investment is still anchored to the value of the business in exactly the same way as the larger owners are.