Selasa, 02 Februari 2010

Investing with Vanguard

Investing with Vanguard

Vanguard is a most popular United States Investment management company. The Vanguard Index Mutual Funds are the most popular variety of mutual funds in USA. The Assets under management under Vanguard Company are worth more than US $ 1 Trillion.

John C. Bogle is the founder and the former Chairman of Vanguard Group. He first time introduced the concept of Index Mutual Funds in USA. His Investment Philosophy was to cut down the cost of the fund by reducing the fund management fees by converting actively managed funds into the index funds which are easy to manage in comparison of the actively managed funds.

The Vanguard Index Fund Philosophy -

For his undergraduate thesis at Princeton, John C. Bogle conducted a study in which he found 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. 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.

Thus, on this theory, John Bogle had introduced the Index Mutual Funds and they got tremendous popularity and the success. Today most of the Mutual Fund Investors in USA prefer Vanguard Index funds over any other mutual funds.

Investing with Vanguard mutual funds means investing for Success & Financial Freedom…!!!

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