see vanguard group anarchist . 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 3.6 trillion march 2016 1 total assets 1.675 trillion 2016 number of employees more than 14 000 in the united states and abroad as of december 31 2015 2 website vanguard.com the vanguard group is an american investment management company based in malvern pennsylvania that manages approximately 3.6 trillion 1 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 . 3 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 4 the popularization of index funds generally and driving costs down across the mutual fund industry . 5 vanguard is owned by the funds themselves and as a result is owned by the investors in the funds . 6 contents 1 the index fund philosophy 2 history 3 see also 4 references 5 external links the index fund philosophy edit 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 . 7 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 . 8 history edit john bogle the chairman of wellington management company 9 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 . 10 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 . 11 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 . 12 the wellington executives still smarting over the bad merger required that the fund not be allowed to engage in advisory or fund management services . given that this effectively disallowed it to start a new actively managed fund bogle saw it as an opportunity to start a passive fund tied to the s & p 500 . 13 14 bogle has since said that he was inspired by not just the academic research showing the potential for a passively managed index fund to outperform an actively managed fund but also by paul samuelson an economist who later won the nobel prize for economics . in a newsweek column samuelson had cited this academic researching in imploring that someone start a passive index fund tied to the s & p 500 . 13 15 the mutual fund industry having grown used to high fee funds marketed as being able to beat the market resisted vanguard s low cost index approach . some labeled it bogle s folly and some claimed it was un american to simply try to be the market rather than to try to beat it . after the wellington board had reluctantly agreed to accept bogle s offer to start the first index fund offered to the general public bogle established the fund . initially called the first index trust in 1976 later changed to vanguard 500 index fund it raised 11 million in its initial public offering . the banks that managed the public offering had been hoping to raise 150 million and after the disappointing results suggested that bogle cancel the fund . 13 bogle refused relishing the fact that he had just established the world s first index mutual fund . vanguard at this time consisted of three employees bogle and two analysts . growth in the first years was slow a situation not helped by the fact that the fund did not pay commissions to brokers who sold it which was unusual at the time . within a year the fund had only grown to 17 million but one of the wellington funds that vanguard was administering had to be merged in with another fund and bogle convinced wellington to merge it in with the index fund . 13 this brought it up to almost 100 million . growth in the fund accelerated after the beginning of the bull market in 1982 and other mutual fund companies began to copy the indexing model . these early attempts were not successful since they typically charged high fees which defeated the purpose of low cost indexing . in 1986 vanguard began its second mutual fund a bond index fund . this was the first bond index fund ever offered to individual investors . one earlier criticism of the first index fund was that it was only an index of the s & p 500 . 13 in 1987 vanguard considered starting a new fund this one modeled on the entire stock market . deciding this was not feasible later that year vanguard began its third fund an extended market fund an index fund of the entire stock market minus the s & p 500 . over the next five years other funds were begun including a small cap index fund an international stock index fund and a total stock market index fund . as the 1990s stock market boom got underway more funds were offered and several including the s & p 500 index fund and the total stock market fund became among the largest funds in the world and vanguard the largest mutual fund company in the world . 16 vanguard s success caused other mutual fund companies which had resisted vanguard s low cost indexing model to begin making a serious effort to offer their own low cost index funds . 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 . both successors expanded vanguard s offerings beyond the index mutual funds that bogle preferred in particular into etfs where vanguard is currently the second largest provider despite its late start and actively managed funds . vanguard also provides brokerage services variable and fixed annuities educational account services financial planning asset management and trust services . in recent years more than 100 % of the cash flow into mutual funds has gone into index funds mainly to vanguard and currently 25 % of all mutual fund assets are in index funds . citation needed the trend towards index funds growing since vanguard s initial index offering has subsequently accelerated since the 2009 market crash . currently the two largest mutual funds in the world the total stock market fund and the 500 index fund are vanguard s while several others such as the total bond market fund and total international market fund are among the ten largest . 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 . noted 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 . 17 vanguard s corporate headquarters are located at malvern pennsylvania a suburb of philadelphia . it has satellite offices in charlotte north carolina and scottsdale arizona . the company also has offices in australia asia and europe . see also edit comparison of online brokerages in the united states ishares list of exchange traded funds money market powershares spdr references edit a b vanguard the world s largest mutual fund company . vanguard.com . retrieved june 15 2016 . fast facts about vanguard . vanguard . vanguard . retrieved 14 march 2016 . etf league table as of march 13 2015 etf.com . etf.com . the first index mutual fund a history of vanguard index trust and the vanguard index strategy . bogle financial markets research center . october 2014 . sommer jeff august 11 2012 . a mutual fund master too worried to rest . new york times . retrieved february 2 2015 . the street august 6 2012 . invest for the future without wall street . accessed august 22 2012 . standard & poor s pdf . standardandpoors.com . retrieved october 21 2013 . the vanguard group inc. private company information businessweek . investing.businessweek.com . retrieved october 21 2013 . slater robert . john bogle and the vanguard experiment one man s quest to transform the mutual fund industry . chicago irwin professional pub . 1997 . isbn 0786305592 boyle matthew december 17 2007 . fortune magazine interview . cnn . retrieved 2007 12 17 . victor reklaitis . 5 things you don t know about vanguard . marketwatch . the first index mutual fund a history of vanguard index trust and the vanguard index strategy a b c d e the first index mutual fund . vanguard.com . http www.nytimes.com 2012 08 12 business john bogle vanguards founder is too worried to rest.html pagewanted all & r 1 & is vanguard too successful . forbes . 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 john neff on investing . external links edit official website yahoo the vanguard group inc. company profile businessweek.com vanguard australia v t e philadelphia area corporations including the delaware valley list of companies based in the philadelphia area philadelphia based fortune 500 corporations rank in the 2015 list comcast 43 aramark 207 crown holdings 318 delaware valley based fortune 500 corporations rank in the 2015 list amerisourcebergen 16 dupont 87 lincoln national 223 universal health services 324 campbell soup 342 ugi 349 burlington stores inc. 500 other notable philadelphia based businesses amoroso s beneficial bank chemtura day & zimmermann fmc corporation independence blue cross pennsylvania real estate investment trust pep boys philadelphia media network radian group urban outfitters notable philadelphia based professional partnerships ballard spahr blank rome cozen o connor dechert drinker biddle & reath duane morris morgan lewis & bockius pepper hamilton saul ewing white and williams other notable delaware valley based businesses actua corporation airgas alliedbarton ametek