Vanguard founder John C. Bogle launched the first equity index fund in 1976 in the United States. He pioneered indexing as a way for investors to access market performance without the high costs.
More than 40 years later, Vanguard Group is established as the global leader in index management. Today, millions of investors around the world rely on us for our high-quality index investments in all major markets and asset classes.
The Vanguard difference in the field of indexing offers investors the advantage of:
To maximise returns to investors
Costs have a significant effect on investment performance over the long term.
Vanguard's unique ownership structure and scale helps to keep costs low. Vanguard funds typically have lower management costs due to the efficient manner in which they operate. Index funds use a buy-and-hold approach, which means their fund managers generally trade securities less frequently than their active counterparts. This reduces brokerage, commission and other trading expenses.
Lower costs are important to us. Every dollar saved in fees is a dollar that's left to earn a potential return.
To mitigate risks
When you invest in an index fund, you buy a representative basket of the securities in an index like the S&P/ASX 300.
This reduces your risk by leaving your portfolio less exposed to the ups and downs of single investments. By investing in a range of index funds you can diversify your portfolio across different industries and securities, both in Australia and overseas.
Minimal tracking error
For consistent performance
Tracking error is the difference between the performance of a fund and the index it's designed to track. It is a key attribute we consider when it comes to performance consistency.
Vanguard's approach reduces the tracking error risk of the portfolio by holding most or all of the index securities very close to their index weights. This provides truly diversified market exposure.
Weighted to reflect the whole market
If the purpose of an index is to reflect the total market exposure to an asset class or sub-asset class, then the index should represent the market-cap-weighted portfolio.
A market-capitalisation index is the only index that measures the collective asset-weighted capital invested within the market it intends to track. It is not necessarily the index that provides the highest return or lowest risk.