Vanguard
The Vanguard Group is the world's second-largest mutual fund company. Vanguard's success is built primarily on low-cost, passively managed index funds. As a staunch advocate of the efficient market theory (which holds that most active managers will fail to outperform the broad market over time), John Bogle, the charismatic founder of Vanguard, has built a loyal following of index enthusiasts.
Simply labeling Vanguard an "index shop," however does not tell the full story. Unlike Fidelity, Vanguard cultivates relationships with some of the top independent managers in the business. The end result is a group of superstar managers that think and act independently from one another. It is only through these sub-advisery relationships with Vanguard that indvidual investors gain access to institutional managers that often require minimums of $10 million or more when managing private accounts.
Why Vanguard Funds?
-Conservative: Vanguard is best known as a fixed income and indexing shop. Our clients know better (46% of Vanguard's equity assets are in actively managed funds), but Vanguard still appeals most to conservative investors.
-Low cost: John Bogle made a successful career out of saving investors money. Vanguard's "mutual" ownership structure (management company owned by member funds) has a built-in cost advantage.
-Institutional quality outside managers: By delegating investment managment to sub-advisers, Vanguard side-steps this problem. Most Vanguard managers are highly respected institutional managers who are only available to individual investors through the Vanguard funds they manage.
-Index funds: If you're an indexer, Vanguard has more options that Fidelity.