The Vanguard Group

The Vanguard Group of investment companies was founded on May 1, 1975 by its first Chairman, John C. Bogle. The firm is based in Malvern, Pennsylvania and offers a wide range of financial services, including mutual funds; brokerage; institutional and personal retirement plan services; college savings programs; annuities; and charitable endowment services. Since 1996, the firm has established financial service companies in Europe and Asia. As of February, 2011, Vanguard was managing approximately $1.6 trillion in U.S. mutual funds. At year end 2010, the firm's asset base consisted of 43% individual investors; 28% financial advisors; 21% institutional and plan sponsors; and 8% international (non-US investors). Vanguard has had three chief executor officers over its corporate history: John Bogle (1975 - 1996); John Brennan (1996 - 2008); and William McNabb (2008 - present).

John Bogle era (1975 - 1996)
The Vanguard Group was an outcome of a 1974 corporate struggle at the Wellington Management Company that resulted in the firing of Wellington's CEO, John Bogle. Bogle appealed to the Wellington Company's mutual funds' board of directors to retain him as the funds' chairman and CEO. The board agreed, and a settlement was reached whereby a new firm, Vanguard, was established (May 1, 1975) to handle administrative and legal services for the funds. At it's founding, the firm had eleven funds, 28 employees, 372,648 investor accounts and provided an average expense ratio of 0.66%

Over the next two years the new firm instituted a series of steps that reflected Bogle's vision of mutual fund management. The new firm was established as a mutual organization with the mutual funds (and by extension, fund shareholders) owning the management company, which would provide services to the funds at cost and reduce conflicts of interest. (The SEC gave final approval of Vanguard's mutual form of business organization in 1981.) In 1976, the firm created the first index fund available to retail investors, Vanguard Index Trust (now known as Vanguard 500 Index Fund). In 1977, the firm abandoned broker distribution and moved to no-load fund distribution. The year also saw the creation of a series of defined maturity bond funds (short term, intermediate term, and long term).

Under John Bogle's direction (1975 - 1996), Vanguard became known for providing both low costs and clear direct communication with fund shareholders. The firm continued its development of index funds, bringing the first bond index fund to retail investors in 1986 and the first retail international index funds in 1990. In 1981 Vanguard began managing most of its fixed income funds in-house with the establishment of its Fixed Income Group.

The growth of employer provided 401k plans led the firm to establish what was to become Vanguard Institutional in 1982. One year later, Bogle partnered with an outside brokerage firm (Pershing) to create Vanguard Brokerage Services (VBS). Bogle continued outside partnerships, this time with insurers (what is now Monumental Life Insurance Company, and in New York, Transamerica Financial Life Insurance Company) to bring a no-load, no surrender fee, low-cost variable annuity program to the firm in 1991. One of Bogle's final innovations were the creation of Vanguard's series of tax-managed funds in 1994.

In 1996 John Bogle, nearing mandatory retirement age, transitioned management of Vanguard to his successor CEO, John Brennan. At the close of Bogle's stewardship, Vanguard had grown to 89 funds and 3,927 employees. The firm was managing 6,681,460 investor accounts at an average 0.31% expense ratio.

John Brennan era (1996 - 2008)

 * 1996 Vanguard Investments Australia Ltd;
 * 1998 Investments Europe NA;
 * 2000 Investments Ltd. Japan;
 * 2002 Services extended to Central and South America, as well as Canada;
 * 2003 Services extended to Singapore


 * 1997 Charitable Endowment Program
 * 2000 Admiral shares established
 * 2001 Exchange Traded Funds established
 * 2003 Established Single Premium Immediate Annuity (SPIA)

William McNabb era (2008 - )

 * 2009 Vanguard Investments UK Ltd.
 * 2010 Vanguard Annuity Access™ established
 * 2010 Vanguard lowers admiral shares thresholds, free trades for Vanguard ETFs