The Vanguard 500 Index Fund Turns 40

Today is a major milestone in the history of investing. Forty years ago, on August 31st, 1976, John C. Bogle launched the first-ever S&P 500 index fund.

Bloomberg’s Ben Steverman with a bit of background:

In 1960, two University of Chicago graduate students published an article in Financial Analysts Journal calling for an “unmanaged investment company.” “Investment companies as a whole have not outperformed representative stock averages,” Edward Renshaw and Paul Feldstein wrote, so why not offer a portfolio that automatically buys every stock in the Dow Jones Industrial Average or some other index?

Easier said than done. It wasn’t until the early 1970s when Vasicek and others at Wells Fargo tried using computers to build index portfolios for pensions. And it wasn’t until Aug. 31, 1976—40 years ago today—that a new firm started offering an index mutual fund, one that anyone could invest in.

Today, that firm, Vanguard Group, is the largest fund company in the world, with $3.6 trillion in assets.

I highly recommend reading Bogle’s classic Common Sense on Mutual Funds to get the whole history from the man himself. It’s the story of a man who, despite early failure and a constant chorus of naysayers, took a very powerful insight and turned it into a massive business. Bogle’s work has benefited tens of millions of investors and it all started with the launch of his first index fund, which was seeded with just $11.4 million and was greeted with near universal apathy and scorn.

That was then, this is now. Vanguard has become one of the largest and possibly the single most influential force in the asset management industry today. It’s been estimated that the firm has saved investors approximately $1 trillion in unnecessary fees over the years. If the truth is even close, that’s a remarkable story.

Now let me show you something. I asked Michael Batnick to run a performance calculation of the Vanguard 500 fund since inception. We come up with a 10.86% annual return, and a cumulative total return of 6,091%! That number is f***ing bonkers. Not bad for a “dumb” product that holds all the losers along with the winners.

Check this out:

vanguard 500 since inception

Happy anniversary.

What's been said:

Discussions found on the web
  1. De eerste tracker - De Bicker commented on Sep 01

    […] uitgeeft. Vanguard’s 500 Index Fund, inmiddels $252 miljard groot, rendeerde gemiddeld 10,86 procent per […]

  2. Vanguard attracts nearly $200bn this year commented on Sep 01

    […] which launched its first index-tracking fund based on the S&P 500 four decades ago on August 31 1976, has been the biggest beneficiary of the shift. It is now the world’s […]

  3. What is the Bitcoin loophole? commented on Sep 25

    … [Trackback]

    […] Here you can find 24624 more Information on that Topic: thereformedbroker.com/2016/08/31/the-vanguard-500-index-fund-turns-40/ […]

  4. Bitcoin Era Review commented on Sep 28

    … [Trackback]

    […] There you will find 42888 additional Information on that Topic: thereformedbroker.com/2016/08/31/the-vanguard-500-index-fund-turns-40/ […]

  5. bitcoin evolution commented on Oct 01

    … [Trackback]

    […] Read More here to that Topic: thereformedbroker.com/2016/08/31/the-vanguard-500-index-fund-turns-40/ […]

  6. rom commented on Oct 15

    … [Trackback]

    […] Here you will find 73860 additional Info on that Topic: thereformedbroker.com/2016/08/31/the-vanguard-500-index-fund-turns-40/ […]

  7. china dumps shop commented on Nov 16

    … [Trackback]

    […] Info to that Topic: thereformedbroker.com/2016/08/31/the-vanguard-500-index-fund-turns-40/ […]

  8. Matthew Erausquin CLA Legal commented on Nov 25

    … [Trackback]

    […] Find More on on that Topic: thereformedbroker.com/2016/08/31/the-vanguard-500-index-fund-turns-40/ […]

  9. rbc login commented on Nov 27

    … [Trackback]

    […] Read More Info here on that Topic: thereformedbroker.com/2016/08/31/the-vanguard-500-index-fund-turns-40/ […]

  10. cibc personal online banking commented on Dec 04

    … [Trackback]

    […] Here you will find 50933 more Info to that Topic: thereformedbroker.com/2016/08/31/the-vanguard-500-index-fund-turns-40/ […]

  11. HP 8970b manuals commented on Jan 19

    … [Trackback]

    […] There you will find 85671 additional Info on that Topic: thereformedbroker.com/2016/08/31/the-vanguard-500-index-fund-turns-40/ […]