The Vanguard Group
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|Founded||May 1, 1975|
|Headquarters||Malvern, Pennsylvania, United States|
|Key people||William McNabb, President
John J. Brennan, Chairman
John C. Bogle, Founder
|Products||Mutual funds, exchange-traded funds, brokerage, asset management|
|AUM||US$2.0 trillion (January 2013)|
|Employees||More than 14,000 in the United States and abroad as of September 30, 2013|
The Vanguard Group is an American investment management company based in Malvern, Pennsylvania, that manages approximately $2.0 trillion in assets. It is the third largest provider of Exchange-traded funds (ETFs) in the US, with approximately $337.2 billion in ETF assets under management, as of January 21, 2014. It offers mutual funds and other financial products and services to retail and institutional investors in the United States and abroad. Founder and former chairman John C. Bogle is credited with the creation of the first index fund available to individual investors, the popularization of index funds generally, and driving costs down across the mutual fund industry.
Vanguard is owned by the funds themselves and, as a result, is owned by the investors in the funds.
The index fund philosophy
For his undergraduate thesis at Princeton, John C. Bogle conducted a study in which he found that around three quarters of mutual funds did not earn any more money than if they invested in the largest 500 companies simultaneously, using the S&P 500 stock market index as a benchmark. In other words, three out of four of the managers could not pick better specific "winners" than someone passively holding a basket of the 500 largest public U.S companies. The managers could pick specific stocks which would do as well as picking the 500 largest stocks (essentially doing as well as random chance would dictate), but the cost to pay their expenses, as well as the high taxes incurred through active trading, resulted in underperforming the index.
At the time, the proverbial riposte to the observation that most funds underperformed the S&P 500 was "of course, you can't invest in an index." John Bogle tried to create a way in which an individual investor could effectively invest in an index. Index funds had already existed for a few years, but were only available to institutions such as pension funds. Having founded Vanguard as a broker-sold mutual fund company, he quickly turned the company into a no-load fund firm (meaning that the buyer pays no sales commission — called a "load" — when buying or selling fund shares) and in 1976 introduced his first index fund. This first index fund for individual investors, called the Vanguard 500 (which invested in the 500 companies that made up the S&P 500), has since out-performed many[which?] other competing large mutual funds. Over $100 billion is invested in this mutual fund, and Vanguard has since created other index funds that focus on stocks in particular industries, countries, or companies of varying size (such as "small-cap" or "mid-cap" indexes).
Bogle retired from Vanguard as chairman in 1999 and was succeeded by John J. ("Jack") Brennan. On August 31, 2008, F. William McNabb III succeeded Brennan as Vanguard's CEO, having served as the organization's president since March of that year.
Since its founding in 1975, Vanguard has grown to become one of the world’s largest no-load mutual fund companies. While mostly known for its low-cost index funds, Vanguard also offers a variety of low-cost, actively managed mutual funds and a line of exchange-traded funds (originally branded as VIPERs [Vanguard Index Participation Receipts].) Vanguard also provides brokerage services, variable and fixed annuities, educational account services, financial planning, asset management, and trust services.
Vanguard contracts the management of its actively managed funds to various investment firms and sets a portion of the management expenses paid by shareholders based on the fund's performance. Wellington Management Company manages two of Vanguard's biggest funds, the Wellington Fund and Wellesley Income Fund. The Wellington Fund is one of Vanguard's oldest funds, formed on July 1, 1929. Legendary value investor John Neff managed the Windsor Fund from 1964 to 1995, which returned 13.7% annually versus 10.6% for the S&P 500.
Vanguard's corporate headquarters is located near Philadelphia in Malvern, Pennsylvania. It has satellite offices in Charlotte, North Carolina and Scottsdale, Arizona. The company also has offices in Australia, Asia, and Europe.
Vanguard is an ETF provider.
- Vanguard Total Stock Market ETF (NYSE Arca: VTI)
- Vanguard FTSE Emerging Markets ETF (NYSE Arca: VWO)
- Vanguard High Dividend Yield ETF (NYSE Arca: VYM)
- Vanguard Total Bond Market ETF (NYSE Arca: BND)
- Vanguard REIT ETF (NYSE Arca: VNQ)
- Vanguard Mid-Cap ETF (NYSE Arca: VO)
- Vanguard Dividend Appreciation ETF (NYSE Arca: VIG)
- Vanguard Total International Stock ETF (NASDAQ: VXUS)
- Vanguard Information Technology ETF (NYSE Arca: VGT)
- Vanguard FTSE All-World ex-US ETF (NYSE Arca: VEU)
- Vanguard Health Care ETF (NYSE Arca: VHT)
- Vanguard Materials ETF (NYSE Arca: VAW)
- Vanguard MSCI EAFE ETF (NYSE Arca: VEA)
- Vanguard Energy ETF (NYSE Arca: VDE)
- Vanguard Growth ETF (NYSE Arca: VUG)
- Vanguard Total World Stock Idx Fd (ETF) (NYSE Arca: VT)
- Vanguard Small-Cap Value ETF (NYSE Arca: VBR)
- Vanguard Extended Market ETF (NYSE Arca: VXF)
- Vanguard Short-Term Bond ETF (NYSE Arca: BSV)
- Vanguard FTSE Europe ETF (NYSE Arca: VGK)
- Vanguard Large-Cap ETF (NYSE Arca: VV)
- Vanguard Utilities ETF (NYSE Arca: VPU)
- Vanguard FTSE All Wd Ex US Small Cap ETF (NYSE Arca: VSS)
- Vanguard Short Term Corporate Bond ETF (NASDAQ: VCSH)
- Vanguard Long-Term Bond ETF (NYSE Arca: BLV)
- Vanguard Financials ETF (NYSE Arca: VFH)
- Vanguard Extended Duration ETF (NYSE Arca: EDV)
- Vanguard Small-Cap Growth ETF (NYSE Arca: VBK)
- Vanguard Value ETF (NYSE Arca: VTV)
- Vanguard Intermediate Tm Cpte Bd ETF (NASDAQ: VCIT)
- Vanguard Consumer Staples ETF (NYSE Arca: VDC)
- Vanguard Intermediate-Term Bond ETF (NYSE Arca: BIV)
- Vanguard MSCI Pacific ETF (NYSE Arca: VPL)
- Vanguard Long Term Corporate Bond ETF (NASDAQ: VCLT)
- Vanguard Mid-Cap Growth ETF (NYSE Arca: VOT)
- Vanguard Sht Term Govt Bond ETF (NASDAQ: VGSH)
- Vanguard Telecommunication Services ETF (NYSE Arca: VOX)
- Vanguard Mega Cap 300 Growth Index ETF (NYSE Arca: MGK)
- Vanguard Industrials ETF (NYSE Arca: VIS)
- Vanguard Consumer Discretionary ETF (NYSE Arca: VCR)
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- "ETF League Table As Of Jan. 21, 2014". IndexUniverse.
- The Street, August 6, 2012. "Invest For The Future Without Wall Street". Accessed August 22, 2012.
- "Standard & Poor's". Standardandpoors.com. Retrieved October 21, 2013.
- "The Vanguard Group, Inc.: Private Company Information - Businessweek". Investing.businessweek.com. Retrieved October 21, 2013.
- "Index Funds | Index Mutual Funds | Investing in Index Funds". Fool.com. Retrieved October 21, 2013.
- Godin, Seth. "If You're Clueless about Mutual Funds and Want to Know More". Dearborn Financial Publishing, Inc. p. 98. Retrieved March 22, 2014.
- John Neff on Investing
- The Battle For ETF Supremacy: Vanguard Ready To Take On BlackRock Seeking Alpha