The Vanguard Group

The Vanguard Group, Inc.

Type	Corporation
Industry	Investment management
Founded	May 1, 1975
Founder	John C. Bogle
Headquarters	Malvern, Pennsylvania, United States
Key people	F. William McNabb III, chairman & CEO
Products	Mutual funds; exchange-traded funds; brokerage; asset management
AUM	$4 trillion (March 2016)
Total assets	$1.781 trillion(2017)
Number of employees	More than 14,000 in the United States and abroad as of December 31, 2015
Website	vanguard.com

The Vanguard Group is an American investment management company based in Malvern, Pennsylvania, that manages approximately $4 trillion in assets. It is the largest provider of mutual funds and now the second-largest provider of exchange-traded funds (ETFs) in the world after BlackRock, with about $451 billion in ETF assets under management, as of March 2015. 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.

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 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.

John Bogle, the chairman of Wellington Management Company, was fired for an "extremely unwise" merger that he approved, a poor decision that he considers his biggest mistake, stating, "The great thing about that mistake, which was shameful and inexcusable and a reflection of immaturity and confidence beyond what the facts justified, was that I learned a lot." Though no longer the chairman, he remained with the company, and arranged to start a new fund division at Wellington. He decided to call it Vanguard, named after Horatio Nelson's flagship at the Battle of the Nile, the HMS Vanguard. Bogle chose this name after a dealer in antique prints left him a book about Great Britain’s naval achievements. The book mentioned Nelson’s flagship, leading Bogle to think, with regard to Vanguard, “What a great name.” Bogle also recounts that Wellington executives resisted the name, but narrowly approved it after Bogle mentioned that Vanguard funds would be listed in the alphabetical listings in the Wall Street Journal next to Wellington funds.