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The Vanguard Group is an investment management company based in Malvern, Pennsylvania, USA. It has filed approximately one trillion in terms of assets. The company offers various financial products and services such mutual funds that they offer in the United States of America and even in other countries worldwide. It was a man whose name is John Bogle, founder and former Harman of the Vanguard group, who is credited to be the first the create index fund availability to individual investors. He is also the one who popularized the index funds in general driving its cost down across the industry of mutual funds.

The Vanguard Groups is said to be unusual compared to other mutual fund companies in the sense that it is owned by the funds themselves. This unique structure enables the contribution of each fund to a set amount of capital for services such as distribution, marketing and shared management. It is with this belief of the Vanguard Group that with their instilled structure, it promotes better orientation of management geared towards the shareholders’ interests. They provide the most cost effective services to funds for the benefit of shareholders while other mutual fund sponsors make profit as well for their outside owners.

The index fund philosophy came about when John Bogle was still an undergraduate at Princeton. For his thesis, he made a study where he discovered that about seventy-five percent of mutual funds did not incur any more earnings than if the same amount is invested in one of the largest five hundred companies simultaneously. He arrived to this conclusion by using the S&P stock market index as the benchmark. This means that three out of four managers do not have the capability to choose better specific “winners” when compared to someone just passively holding a basket of five hundred largest public US based companies. On the other hand, the managers would be able to pick specific stocks that can do as well as picking the 500 largest stocks in the US but the cost of the expenses to be incurred as well as the high taxes involved in active trading will eventually result in an underperforming index.

The history of the creation of the Vanguard Group started in an argument. At the time, John Bogle was interested in the fact that it was yet impossible to invest in an index and he wanted to prove otherwise. He wanted to create a way that would enable one to invest in an index and benefit from it also. When John Bogle founded Vanguard Group, he structured it as a broker-sold mutual fund company and then turned it quickly into a no-load fund firm. A no-load fund firm means that all the buyers do not have to pay sales commission, also known as the “load”, when it comes to buying and selling of fund shares. In the year 1976, he introduced the very first index fund. He made a breakthrough when he had proven that the Vanguard 500, the first index made for individual investors, outperformed a lot of large mutual funds competitors. The Vanguard 500 works by investing in five hundred companies that made up the S&P 500.

There were over one hundred billion dollars invested in the mutual fund and since its success, the Vanguard Group has initiated the creation of other index funds focusing on stocks in specific industries, companies and even countries of varying size. The company’s index funds range from small-cap to mid-cap indexes.

From the reign of John Bogle until 1999, he was then succeeded by Jack Brennan. Brennan, on the other hand, was succeeded by William McNabb on 31st of August 2008. William McNabb is the current CEO of the Vanguard Group having formerly served as the President of the company since March of 2008.

Since the founding of the company in 1975, the Vanguard Group has now grown to become a force to reckon with being the largest pure no-load mutual fund company in the world. Aside for the low-cost index funds, Vanguard also offers other investment opportunities such as low-cost actively managed mutual funds, exchange traded funds, brokerage services, variable and fixed annuities, trust services, educational account services, financial planning and asset management.