More than 30 years old, The Vanguard Group is one of the biggest
mutual fund managers in the U.S. having more than $1.0
trillion in assets as of June 2009. It's also grown from
350,000 to more than 19 million shareholder accounts, and from 40
employees to 12,400 in the U.S. alone. Headquartered in the
green fields of Valley Forge, Pa., Vanguard also has offices in
Scottsdale, Charlotte, Melbourne, Sydney, Amsterdam, Brussels,
Paris, Singapore, Seoul and Tokyo.
Vanguard offers brokerage services, variable and fixed annuities,
financial planning, asset management and trust services to
individuals and institutional investors around the world. Vanguard
boasts 150 domestic funds (including variable annuity portfolios)
and 50 additional funds in international markets. Its Vanguard 500
Index Fund, worth $128 billion, is consistently ranked among the
best in the country and the company is often ahead of the pack in
its use of technology and e-business strategies.
One of these things is not like the others
Founder John C. Bogle knew he was taking a different track in
mutual funds when he launched Vanguard, the "Vanguard Experiment,"
he called it. Bogle wanted to find ways to cut administrative
costs in the mutual fund industry; as a result, Vanguard's model is
unlike that of other mutual funds. Instead of being
controlled by an external management company, Vanguard is owned by
its shareholders and its funds are independent investment companies
that in turn own the Vanguard Group. This lowers the funds'
operating expenses by cutting middleman fees, and Vanguard further
lowers the bottom line by spending very little on marketing.
As for the savings, well, those go to the customers who pay low
fees. Vanguard's top executives have been vocal in their
critique of the mutual fund industry's habit of charging high fees
and hitting customers with hidden costs.
Join the crew
If you work at Vanguard, you're not an employee; you're a "crew
member." All employees have been called crew members from day one;
the firm itself was named for the ship British admiral Sir Horatio
Nelson commanded in the Napoleonic Wars. This pioneering spirit led
Vanguard to create its First Index Investment Trust in 1976 (the
First Index is now known as the Vanguard 500 Index Fund). It
was the first indexed mutual fund to be made available to
individual investors, and in 1977 Vanguard stopped relying on
outside brokers completely and began marketing directly to
The fearless founder
The Vanguard Group's existence has much to thank John Bogle
for. Bogle established the mutual fund organization in 1974,
working as chairman and CEO until 1996. In addition to his
work with Vanguard, Bogle has worked on the Independence Standards
Board and has served as chairman of the Board of the National
Constitution Center since 1999 (a position he serves alongside
former President George H.W. Bush). Over the years, Bogle and
his work has been lauded by various publications, he has been
praised as one of the world's 100 most powerful and influential
people by Time magazine and as a "giant of the 20th century" by
Fortune. Institutional Investor magazine has also given Bogle
a Lifetime Achievement Award and he has also garnered the Woodrow
Wilson Award from Princeton University.