The Vanguard Group
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The Vanguard Group is an American investment management company that offers mutual funds and other financial products and services to individual investors and institutional investors in the United States and abroad. Company headquarters are near Valley Forge, Pennsylvania. Its founder, John C. Bogle is credited with the creation of the index fund. Vanguard Group is unusual among mutual-fund complexes in that it is owned by the funds themselves: each fund in the group contributes a set amount of capital towards shared management, marketing, and distribution services. The company claims that this structure orients its management better towards the interests of shareholders, as compared with other mutual-fund sponsors, which are expected to simultaneously make a profit for their outside owners and provide the most cost-effective service to funds and their shareholders.
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The Index Fund Philosophy
John Bogle did a study whereby he found around three fourths of mutual funds do not earn more money than if they were to invest in the largest 500 companies simultaneously, using the Standard & Poor's 500 stock index as a bogey. In other words, three out of four of the managers could not pick better specific "winners" than someone just holding a basket of the 500 largest public U.S. companies. In reality, the managers could pick specific stocks which would do about as well as picking the 500 largest stocks, but the cost to pay their salaries and other expenses ended up making the investor not make as much money as the index. The argument at the time was that it was impossible to invest in an index. John Bogle used this information and attempted to create a way that one could invest in an index. Having founded the Vanguard Group as a broker-sold mutual fund company he eventually turned the company into a no-load fund firm and in 1976 introduced his first index fund. This first index, called the Vanguard 500 (which invested in the 500 companies that made up the Standard & Poor's 500 stock index), has since performed better than many other competing large mutual funds. Over 100 billion dollars are invested in this mutual fund, and the Vanguard Group have since created other, more specific index funds and normal mutual funds. Bogle retired from Vanguard in 1999 and was succeeded as Chairman by John Brennan. Vanguard has continued to follow Bogle's emphasis on index funds and low expenses.
Since its founding in 1975, Vanguard has grown to become the world’s largest pure no-load mutual fund company. In addition to mutual funds, Vanguard offers brokerage services, variable and fixed annuities, and life insurance, as well as financial planning, asset management, and trust services.
See also
External links
- The Vanguard Group (http://www.vanguard.com/)
- Adviser Online - Independent Vanguard Advice (http://www.adviseronline.com/)
Data
- Yahoo! - The Vanguard Group, Inc. Company Profile (http://biz.yahoo.com/ic/43/43321.html)
- VFINX: Summary for VANGUARD INDEX TRUST 500 INDEX - Yahoo! Finance (http://finance.yahoo.com/q?s=VFINX&d=t)
- Yahoo! - Mutual funds listed by assets (http://screen.yahoo.com/a?na=20000/&b=1&z=na&db=funds&vw=1)