Vanguard: The Disruptive Innovation Company

Vanguard is one of the world’s largest investment companies, offering a large selection of low-cost mutual funds, ETFs, advice, and related services. From its start in 1975, Vanguard has stood out as a very different kind of investment firm. Vanguard was founded on a simple but revolutionary idea—that a mutual fund company should be managed in the sole interest of its fund shareholders. Founder John C. Bogle structured Vanguard as a client-owned mutual fund company with no outside owners seeking profits.

  • More than $3 trillion in global assets under management, as of December 31, 2015
  • About 175 U.S. funds (including variable annuity portfolios) and about 145 additional funds in markets outside the United States, as of December 31, 2015
  • More than 20 million investors, in about 170 countries, as of December 31, 2015
  • Average expense ratio: 0.18% (U.S. fund expenses as a percentage of 2015 average net assets)

 

Vanguard is different from the rest

Vanguard's unique ownership structure, the Vanguard funds own Vanguard

 

Vanguard is structured as a “mutual” mutual fund company. The typical fund management company is owned by third parties, either public or private stockholders, not by the funds it serves. These fund management companies have to charge fund investors fees that are high enough to generate profits for the companies’ owners. In contrast, the Vanguard funds own the management company known as Vanguard—a unique arrangement that eliminates conflicting loyalties. Under its agreement with the funds, Vanguard must operate “at-cost”—it can charge the funds only enough to cover its cost of operations. No wonder Vanguard’s average fund expense ratio in 2015 was 0.18%, less than one-fifth that of the 1.01% industry average.

 

Sources: https://about.vanguard.com/who-we-are/fast-facts/

https://about.vanguard.com/who-we-are/a-remarkable-history/

https://about.vanguard.com/what-sets-vanguard-apart/why-ownership-matters/

Disclosure: This website contains the public articles, and this communication is for informational purposes only. Nothing herein should be construed as my opinion, solicitation, recommendation or an offer to buy or sell any securities or product, and does not constitute legal or tax advice. The information contained herein has been obtained from publicly available sources believed to be reliable but we do not guarantee accuracy or completeness. Do not act or rely upon the information and advice given in this publication without seeking the services of competent and professional investment, legal, tax, or accounting counsel.

 

LiveJournalLinkedInEmailFacebookTwitterShare

Comments

comments

Leave a Reply

WordPress Themes