On August 31, 1976, Vanguard launched First Index Investment Trust—now known as Vanguard® 500 Index Fund. It was the nation's first index mutual fund available to individual investors.
Thirty years later, the investment world has been permanently changed.
"The introduction of the First Index Investment Trust was one of the few truly seminal dates in the mutual fund industry," said John J. Brennan, Vanguard chairman and CEO. "It offered the individual investor a broadly diversified, low-cost investment approach that wasn't available before."
Hear an interview with Vanguard indexing experts Gus Sauter and Ken Volpert.
› Listen now (8˝ minutes) The reaction to this momentous event? A frown and a shrug. Conventional wisdom said that only actively managed funds made sense for individuals. Why would anyone not try to beat the market?
Why use indexing?
One economics professor had an answer to that question. When Princeton Professor Burton G. Malkiel wrote A Random Walk Down Wall Street in 1973, he explained in plain English why it's so difficult to outperform market averages, which are unburdened by investment management costs. Simply tracking an index's performance, he said, offered a superior long-term strategy.[/i]
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