The Vanguard Group

File:Photo of a John C. Bogle By Bill Cramer.jpg

In 1951, for his undergraduate thesis at Princeton University, John C. Bogle conducted a study in which he found that most mutual funds did not earn more money compared to broad stock market indexes.{{Cite web |last=Armbruster |first=Mark |date=October 14, 2016 |title=Comparing index mutual funds and active managers |url=http://www.armbrustercapital.com/wp-content/uploads/2017/02/Comparing-Index-Mutual-Funds-10-14-2016.pdf |publisher=Rochester Business Journal}} Even if the stocks in the funds beat the benchmark index, management fees reduced the returns to investors below the returns of the benchmark.{{Cite web |last=MacBride |first=Elizabeth |date=October 14, 2015 |title=Jack Bogle: Follow these 4 investing rules—ignore the rest |url=https://www.cnbc.com/2015/10/14/jack-bogle-follow-these-4-investing-rules-ignore-the-rest.html |publisher=CNBC}}

Immediately after graduating from Princeton University in 1951, Bogle was hired by Wellington Management Company.{{Cite web |last=Ferri |first=Rick |date=February 10, 2014 |title=What Was John Bogle Thinking? |url=https://www.forbes.com/sites/rickferri/2014/02/10/what-was-john-bogle-thinking/#5ed1c96968e7 |website=Forbes Magazine}} In 1966, he forged a merger with a fund management group based in Boston. He became president in 1967 and CEO in 1970. However, the merger ended badly and Bogle was therefore fired in 1974. Bogle has said about being fired: "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. And if I had not been fired then, there would not have been a Vanguard."{{Cite news |last=Boyle |first=Matthew |date=December 17, 2007 |title=Be prepared for a lot of bumps |publisher=Fortune Magazine |url=https://money.cnn.com/magazines/fortune/fortune_archive/2007/12/24/101939724/index.htm}}

Bogle arranged to start a new fund division at Wellington. He named it Vanguard, after Horatio Nelson's flagship at the Battle of the Nile, {{HMS|Vanguard|1787|6}}.{{Cite web |last=Reklaitis |first=Victor |date=December 22, 2014 |title=5 things you don't know about Vanguard |url=http://www.marketwatch.com/story/5-things-you-dont-know-about-vanguard-2014-10-31 |website=MarketWatch}} Bogle chose this name after a dealer in antique prints left him a book about Great Britain's naval achievements that featured HMS Vanguard. Wellington executives initially resisted the name, but narrowly approved it after Bogle mentioned that Vanguard funds would be listed alphabetically next to Wellington Funds.

The Wellington executives prohibited the fund from engaging in advisory or fund management services. Bogle saw this as an opportunity to start a passive fund tied to the performance of the S&P 500, which was established in 1957. Bogle was also inspired by Paul Samuelson, an economist who later won the Nobel Memorial Prize in Economic Sciences, who wrote in an August 1976 column in Newsweek that retail investors needed an opportunity to invest in stock market indexes such as the S&P 500.{{Cite web |last=Mihm |first=Stephen |date=September 6, 2016 |title=How Index Funds Prevailed |url=https://www.bloomberg.com/view/articles/2016-09-06/how-index-funds-prevailed |publisher=Bloomberg L.P.}}{{Cite web |last=Baldwin |first=William |date=January 21, 2015 |title=Is Vanguard Too Successful? |url=https://www.forbes.com/sites/baldwin/2015/01/21/is-vanguard-too-successful/ |website=Forbes Magazine}}

In 1976, after getting approval from the board of directors of Wellington, Bogle established the First

Index Investment Trust (now called the Vanguard 500 Index Fund).{{Cite web |last=Culloton |first=Dan |date=August 9, 2011 |title=A Brief History of Indexing |url=http://news.morningstar.com/articlenet/article.aspx?id=390749 |publisher=Morningstar}} This was one of the earliest passive investing index funds, preceded a few years earlier by a handful of others (e.g., Jeremy Grantham's Batterymarch Financial Management in Boston, and index funds managed by Rex Sinquefield at American National Bank in Chicago, and John "Mac" McQuown at Wells Fargo's San Francisco office).{{Cite book |last=Fox |first=Justin |url=https://www.worldcat.org/oclc/753745023 |title=The myth of the rational market : a history of risk, reward, and delusion on Wall Street |date=2011 |publisher=Harper Business |isbn=978-0-06-059903-4 |edition=1st |location=New York |oclc=753745023}}{{Cite web |last=Riley |first=Naomi Schaefer |date=October 26, 2012 |title=The Weekend Interview with Rex Sinquefield: Meet One of the Super-PAC Men |url=https://www.wsj.com/articles/SB10001424052970203897404578078551936968168 |url-access=subscription |website=WSJ |accessdate=December 30, 2015}}

Bogle's S&P 500 index raised $11 million in its initial public offering, compared to expectations of raising $150 million.{{Cite web |last1=Bogle |first1=John |last2=Rafalaf |first2=Andrew |date=October 1, 2002 |title=A Wall Street Revolution |url=https://money.cnn.com/magazines/fsb/fsb_archive/2002/10/01/330578/index.htm |website=Fortune Magazine |publisher=CNN}} The banks that managed the public offering suggested that Bogle cancel the fund due to the weak reception, but Bogle refused. At this time, Vanguard had only three employees: Bogle and two analysts. Asset growth in the first years was slow, partially because 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 in assets, 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. This brought assets up to almost $100 million.

Growth in assets accelerated after the beginning of a bull market in 1982, and the indexing model became more popular at other companies. These copy funds were not successful since they typically charged higher fees, which defeated the purpose of index funds. In November 1984, Vanguard launched the Vanguard Primecap fund in collaboration with Primecap.{{Cite web |last=Norton |first=Leslie P. |title=Primecap in the Spotlight |url=https://www.barrons.com/articles/primecap-in-the-spotlight-1460174680 |access-date=August 19, 2023 |website=www.barrons.com |language=en-US}} In December 1986, Vanguard launched its second mutual fund, a bond index fund called the Total Bond Fund, which was the first bond index fund ever offered to individual investors.{{Cite book |last=Bogle |first=John C. |url=https://books.google.com/books?id=9WmHM2y8AEEC&pg=PT149 |title=The Clash of the Cultures: Investment vs. Speculation |date=July 5, 2012 |publisher=John Wiley & Sons |isbn=9781118238219}} One earlier criticism of the first Index fund was that it was only an index of the S&P 500. In December 1987, Vanguard launched its third fund, the Vanguard Extended Market Index Fund, an index fund of the entire stock market, excluding the S&P 500.{{Cite web |title=Quick Guide to Vanguard Extended Market Index Investor Fund (VEXMX) |url=https://uk.finance.yahoo.com/news/quick-guide-vanguard-extended-market-130901563.html |access-date=September 13, 2024 |website=Yahoo Finance |date=March 4, 2016 |others=Zacks Equity Research}} Over the next five years, other funds were launched, including a small-cap index fund, an international stock index fund, and a total stock market index fund. During the 1990s, more funds were offered, and several Vanguard funds, including the S&P 500 index fund and the total stock market fund, became among the largest funds in the world, and Vanguard became the largest mutual fund company in the world.{{Cite book |last=Godin |first=Seth |url=https://archive.org/details/ifyourecluelessa00godi |title=If You're Clueless about Mutual Funds and Want to Know More |date=1997 |publisher=Dearborn Financial Publishing, Inc. |page=[https://archive.org/details/ifyourecluelessa00godi/page/98 98] |isbn=9780793125548 |url-access=registration}} Noted investor John Neff retired as manager of Vanguard's Windsor Fund in 1995, after a 30-year career in which his fund beat returns of the S&P 500 index by an average of 300 basis points (3%) per year.{{cite web |last=DiStefano |first=Joseph |url=https://www.inquirer.com/business/john-neff-obituary-vanguard-windsor-funds-university-pennsylvania-endowment-fidelity-20190605.html?mod=article_inline |title=Brilliant stock picker John Neff, who ran Vanguard's Windsor Fund and built Penn's endowment, dies at 87 |publisher=The Philadelphia Inquirer |date=June 5, 2019 |archive-url=https://archive.today/20231213142200/https://www.inquirer.com/business/john-neff-obituary-vanguard-windsor-funds-university-pennsylvania-endowment-fidelity-20190605.html |archive-date=December 13, 2023 |url-status=live}}

In March 2021, Vanguard joined over 70 asset managers, aiming to have companies within their portfolios to achieve net-zero emissions by 2060, a goal that parallels the Paris Agreement.{{Cite news |date=March 29, 2021 |title=Investors BlackRock, Vanguard join net zero effort |language=en |work=Reuters |url=https://www.reuters.com/article/us-climate-change-investors-idUSKBN2BL0AX |access-date=September 3, 2022}} Climate and Indigenous advocates felt optimistic about this development, but stressed the issue that Vanguard must also stop investing in companies that engage in deforestation, fossil fuel extraction, and environmental degradation. In line with their sustainability efforts, Vanguard has put out a number of statements aimed at tackling climate change within their portfolios and the world at large. Despite these statements, the company continues to have companies within their investor portfolios that contribute to fossil fuel production and the furtherance of climate change, such as ENAP Sipetrol, China National Petroleum Corporation (CPNC), and Petroamazonas.{{Cite web |last=Peterson |first=Laura |date=June 2021 |title=Investing in Amazon Crude II |url=https://amazonwatch.org/assets/files/2021-investing-in-amazon-crude-ii.pdf}} When it comes to the issue of Indigenous rights, Vanguard has released a statement titled "Social Risks and Right of Indigenous Peoples"{{Cite web |date=December 2020 |title=Vanguard Investment Stewardship Insights |url=https://corporate.vanguard.com/content/dam/corp/advocate/investment-stewardship/pdf/perspectives-and-commentary/ISTAHR_122020.pdf }} which lists a series of questions for companies on the topic. However, Vanguard frames these questions with the aim of protecting Indigenous culture without any kind of concrete policy to safeguard Indigenous rights and ensure that the internationally recognized right of Free, Prior, and Informed Consent is present in discussions with Indigenous communities.

In terms of financial involvement, Vanguard held at least $86 billion in coal in 2021,{{Cite web |title=Groundbreaking Research Reveals the Financiers of the Coal Industry {{!}} urgewald e.V. |url=https://www.urgewald.org/en/medien/groundbreaking-research-reveals-financiers-coal-industry |access-date=September 3, 2022 |website=www.urgewald.org}} making them the world's number one investor in the industry. Additionally, according to Amazon Watch, in the same year, the company held $2.6 billion in debt and $9.6 billion in equities for oil companies currently working within the Amazon rainforest.

Bogle retired from Vanguard as chairman in 1999 when he reached the company's mandatory retirement age of 70 and he was succeeded by John J. ("Jack") Brennan.{{Cite web |last=Costello |first=Martine |date=August 12, 1999 |title=Vanguard's Bogle retires |url=https://money.cnn.com/1999/08/12/mutualfunds/funds_vanguard/ |publisher=CNN}} In February 2008, F. William McNabb III became President{{Cite web |date=February 22, 2008 |title=McNabb To Succeed Brennan at Vanguard |url=https://www.forbes.com/2008/02/22/vanguard-mcnabb-brennan-face-markets-cx_pm_0222autofacescan02.html |website=Forbes Magazine}} and in August 2008, he became CEO.{{Cite news |date=December 14, 2009 |title=Executive Moves |publisher=Money Management Executive |url=http://www.mmexecutive.com/issues/2009_48/-200787-1.html}} Both of Bogle's successors expanded Vanguard's offerings beyond the index mutual funds that Bogle preferred, in particular into exchange traded funds (ETFs) and actively managed funds.{{Cite web |title=Index funds vs. actively managed funds {{!}} Vanguard |url=https://investor.vanguard.com/index-funds/index-vs-active |access-date=May 19, 2020 |website=investor.vanguard.com}} Some of Vanguard's actively-managed funds predate Bogle's retirement however (their healthcare stock fund began in 1984).{{Cite web|url=https://investor.vanguard.com/mutual-funds/profile/VGHCX|title=Vanguard Mutual Fund Profile | Vanguard|website=investor.vanguard.com}} Bogle had been skeptical of ETFs as they trade mid-day like single stocks while mutual funds trade on a single price at day's end. He believed buy and hold investors could make good use of ETFs tracking broad indices, but thought ETFs had potentially higher fees due to the bid ask spread, could be too narrowly specialized, and worried anything that could be traded mid-day would be traded mid-day, potentially reducing investor returns.{{Cite web |last=Benz |first=Christine |year=2010 |title=Bogle: Buy and Hold, Don't Trade ETFs |url=https://www.morningstar.com/articles/355645/bogle-buy-and-hold-dont-trade-etfs |access-date=July 9, 2021 |website=Morningstar.com}}

In May 2017 Vanguard launched a fund platform in the United Kingdom.{{Cite news |last=Ricketts |first=David |title=Hargreaves hit as Vanguard goes direct to man on the street |language=en-GB |url=https://www.fnlondon.com/articles/vanguard-goes-direct-to-man-on-the-street-in-new-price-war-20170516 |access-date=October 4, 2019}}

In July 2017, it was announced that McNabb would be replaced as chief executive officer by chief investment officer Mortimer J. Buckley, effective January 1, 2018.{{Cite web |last=Smith |first=Peter |date=July 13, 2017 |title=Tim Buckley to succeed Bill McNabb as Vanguard chief |url=https://www.ft.com/content/646dd648-67d2-11e7-8526-7b38dcaef614?mhq5j=e3 |access-date=July 14, 2017 |website=Financial Times|url-access=subscription}} McNabb remains at the company as chairman.{{Cite news |last=Moyer |first=Liz |date=July 13, 2017 |title=Vanguard, manager of $4.4 trillion and leader in the index fund business, is getting a new CEO |work=CNBC |url=https://www.cnbc.com/2017/07/13/vanguard-ceo-f-william-mcnabb-to-step-down.html |access-date=January 26, 2018}}

In 2020, Vanguard rolled out a digital adviser and began building up an investment team in China.{{Cite web |last1=Wigglesworth |first1=Robin |last2=Henderson |first2=Richard |date=January 12, 2020 |title=Vanguard and the US financial system: too big to be healthy? |url=https://www.ft.com/content/9414052a-3142-11ea-9703-eea0cae3f0de |archive-url=https://ghostarchive.org/archive/20221211/https://www.ft.com/content/9414052a-3142-11ea-9703-eea0cae3f0de |archive-date=December 11, 2022 |url-status=live |access-date=December 21, 2020 |website=Financial Times|url-access=subscription}} In October 2020, Vanguard returned about $21 billion in managed assets to government clients in China due to concerns about legal compliance, staffing and profitability.{{Cite news |title=Vanguard Returns $21 Billion in Assets to China State Funds |url=https://www.bloomberg.com/news/articles/2020-10-09/vanguard-returns-21-billion-in-assets-to-china-s-state-funds |archive-url=https://web.archive.org/web/20201012055340/https://www.bloomberg.com/news/articles/2020-10-09/vanguard-returns-21-billion-in-assets-to-china-s-state-funds |archive-date=October 12, 2020 |access-date=October 11, 2020 |website=Bloomberg|date=October 9, 2020 }} In response to its China investments, the Financial Times reported that the nonprofit group Coalition for a Prosperous America criticized Vanguard for "acting as a pipeline through which US investment dollars are being funneled into Chinese military companies and corporations sanctioned over human rights abuses."{{Cite news |last1=Kynge |first1=James |last2=Sevastopulo |first2=Demetri |last3=Lockett |first3=Hudson |date=October 12, 2023 |title=Vanguard funds invest in China military groups, report says |work=Financial Times |url=https://www.ft.com/content/a37c6b7c-bec1-457b-8125-a3dbe2a8a275 |url-access=subscription |access-date=October 12, 2023}}

In February 2021, Vanguard launched its fractional share program of its exchange-traded funds, or ETFs, where investors can invest for as little as $1. Fractional share ownership is a derivative of micro-investing, a type of investment strategy that is designed to make investing regular, accessible and affordable, especially for those who may not have a lot of money to invest or who are new to investing.{{Cite news |first=Aaron|last= Lucchetti |title=E-Tailers Allow Buyers to Add Fund Investments to Carts |url=https://www.wsj.com/articles/SB945730607441550739 |access-date=April 20, 2023 |newspaper=Wall Street Journal |date= December 22, 1999 |language=en-US |url-access=subscription |url-status=live |archive-url=https://archive.today/20230421001418/https://www.wsj.com/amp/articles/SB945730607441550739 |archive-date=21 April 2023 }}{{Cite web |title=The Innovators Meet the 65 companies and their owners who have conjured up the latest wave of products, services, and technologies. |date=May 1, 2001 |url=https://money.cnn.com/magazines/fsb/fsb_archive/2001/05/01/302520/ |access-date=April 20, 2023 |website=CNN Money |first1=Lee |last1= Smith |first2=Joel |last2=Dreyfuss |first3=Brad |last3=Grimes|first4=Jennifer |last4=Keeney|first5=Jennifer |last5=Pendleton|first6=Karen |last6=Solomon|first7=Scott |last7=Spanbauer|first8=Sarah |last8=Roberts-Witt|first9=Louise |last9=Witt }}

The Vanguard Group has been the subject of conspiracy theories, including the conspiracy theory that the Vanguard Group is part of a plot that orchestrated the COVID-19 pandemic. Some Vanguard Group conspiracy theories have also incorporated antisemitism, such as a conspiracy theory falsely claiming that Vanguard Group CEO Mortimer J. Buckley, who is of Irish Catholic heritage, is Jewish and is part of a Jewish cabal responsible for COVID and a "COVID agenda".{{cite news|url=https://www.reuters.com/article/uk-factcheck-pharmaceuticals-philanthrop/fact-check-the-covid-19-pandemic-was-not-orchestrated-by-pharmaceutical-companies-investment-groups-and-philanthropists-idUSKBN29Z0TM |title=Fact check: The COVID-19 pandemic was not orchestrated by pharmaceutical companies, investment groups and philanthropists |date=January 30, 2021 |work=Reuters |accessdate=April 27, 2023}}{{cite news|url=https://www.jpost.com/diaspora/antisemitism/article-712270 |title='COVID agenda is Jewish': Antisemitic flyer found at Melbourne synagogue |date=July 16, 2022 |newspaper=The Jerusalem Post |accessdate=April 27, 2023}}

In November 2022, Vanguard launched its superannuation fund in Australia under the name Vanguard Super.{{cite news|title=Vanguard looks to shake up Australia's $3.3 trillion super sector with low-fee products |url=https://www.smh.com.au/money/super-and-retirement/us-giant-looks-to-shake-up-australia-s-3-3-trillion-super-sector-with-low-fee-products-20221110-p5bx76.html |work=The Sydney Morning Herald|date=November 11, 2022|access-date=March 19, 2023}}

On May 14, 2024, Vanguard announced the appointment of Salim Ramji, a veteran from BlackRock Inc., as its next CEO, succeeding Tim Buckley. Ramji, the first outsider to lead Vanguard, assumed his role on July 8, 2024.{{Cite web |last=Brush |first=Silla |date=2024-05-14 |title=Vanguard Appoints BlackRock Veteran Salim Ramji as Next CEO - BNN Bloomberg |url=https://www.bnnbloomberg.ca/vanguard-appoints-blackrock-veteran-salim-ramji-as-next-ceo-1.2073003 |access-date=2024-05-15 |website=BNN |publisher=Bloomberg}}{{Cite web |last=Godbout |first=Ted |date=July 8, 2024 |title=Ramji Takes the Helm as Vanguard CEO |url=https://www.napa-net.org/news-info/daily-news/ramji-takes-helm-vanguard-ceo |access-date=July 12, 2024 |website=National Association of Plan Advisors}}

Vanguard is one of the top five shareholders in Kernel Holding, an agribusiness that is the largest producer and exporter of grains in Ukraine.{{cite web |title=War and Theft: The Takeover of Ukraine’s Agricultural Land |url=https://www.oaklandinstitute.org/war-theft-takeover-ukraine-agricultural-land |website=Okland Institute |access-date=20 August 2024}}{{cite web |title=Kernel |url=https://www.kernel.ua/ |website=Kernel.ua |access-date=20 August 2024}} Vanguard has been donating to humanitarian aid causes in Ukraine as a response to the Russo-Ukrainian War and implementing economic sanctions against Russia.{{cite web |title=Vanguard’s Response to the War in Ukraine and Current Events {{!}} Vanguard |url=https://investor.vanguard.com/investor-resources-education/news/vanguards-response-to-the-war-in-ukraine |website=investor.vanguard.com |access-date=20 August 2024 |language=en}}

Criticisms:

Vanguard is rated F by the Better Business Bureau (BBB). BBB mentions 43 complaints not resolved and 11 not answered to. BBB also states that due to the excessively high volume of complaints that it only publishes 1 out of 10 consumer complaints.{{Cite web |title=Vanguard Group Of Investment Companies {{!}} BBB Complaints {{!}} Better Business Bureau |url=https://www.bbb.org/us/pa/malvern/profile/investment-security/vanguard-group-of-investment-companies-0241-80000841/complaints |access-date=2025-02-27 |website=www.bbb.org |language=en}}

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