Formation 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. Even if the stocks in the funds beat the benchmark index, management fees reduced the returns to investors below the returns of the benchmark. Immediately after graduating from Princeton University in 1951, Bogle was hired by
Wellington Management Company. In 1966, he forged a merger with a fund management group based in Boston. 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, . 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. 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). 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). Bogle's S&P 500 index fund raised $11 million in its
initial public offering, compared to expectations of raising $150 million. The banks that managed the public offering suggested that Bogle cancel the fund due to the weak reception, but Bogle refused. 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. One earlier criticism of the first Index fund was that it was only an index of the S&P 500. 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. 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.
1999-present 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. In February 2008, F. William McNabb III became President and in August 2008, he became CEO. 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. Some of Vanguard's actively-managed funds predate Bogle's retirement however (their healthcare stock fund began in 1984). 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. In May 2017, Vanguard launched a
fund platform in the United Kingdom. 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. McNabb remains at the company as chairman. In 2020, Vanguard launched a digital adviser and began building up an investment team in China. 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.
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." 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. In November 2022, Vanguard launched its
superannuation fund in Australia under the name Vanguard Super. In May 2024, Vanguard announced the appointment of Salim Ramji, a veteran from
BlackRock and the first outsider to lead Vanguard, as its next
CEO, succeeding
Mortimer J. Buckley, effective July 2024. In 2025, Vanguard was included in a UN report on
corporations complicit in the
Gaza genocide as one of the main investors in military and technology firms supporting Israel's war on Gaza, including
Caterpillar Inc.,
Chevron,
Palantir,
Lockheed Martin and
Elbit Systems. ==Investments in companies that add to carbon emissions==