Thursday, November 20, 2008

Vanguard Group

John Bogle and the Largest Mutual Funds Organization.

John Bogle is considered one of the most influential and big-gun personalities in the stock market. Thanks to his contribution to investment history, most of people have changed the ways they were investing their money. His main idea was to decrease the costs of investing. In 1974 he founded the company named Vanguard Group which is the largest investment management company in the world. John Bogle has launched the very first index fund that enabled ordinary investors to put their money in. At the present time, this fund is the largest mutual fund in the world. This success traces traces its roots back to 1951, when John Bogle wrote his senior basis at Princeton University. The Princeton alumni has developed a unique corporate structure that replaced less efficient old one. John Bogle was leading the company that fired him in 1974 and he founded his own one – the Vanguard Group. And then this person saw a bright future for investment industry in making funds independent and keeping the costs of investing down. And then in 1975, the first market mutual fund started its operations. The first market mutual fund made a revolution in the industry: investors did not have to pay sales charges, management fees, and transaction costs. The first market mutual fund started a new era with small operating costs and high tax efficiency. The investors started to trust more in mutual funds. Since then, they have a pretty deep insight in what the mutual fund company is doing and what its investment strategy is like. This total fallacy in the middle of 1970s turned out to be the doctrine in 2000. The Vanguard Group has introduced the new environment at the market. Now many mutual funds has this investment strategy that John Bogle has once introduced: simple and time-tested, that can outperform and bring the biggest distributions. According to Bogle, the more simplicity in investing, the higher the level of profits. The importance of low costs is crucial.