A leader in the mutual funds industry and a popular choice among investors, the Vanguard Group was founded in the year 1975, and has well over $800 billion under management. The Vanguard family known for its educational outreach and indexing expertise pioneered indeed mutual funds in 1974.
The Vanguard Mutual fund consists of over 100 mutual fund portfolios (no sales commissions on any of them). The Vanguard 500 Index Fund is the single largest fund in the world having out-performed many other competing large mutual funds (nearly $100 billion invested in this fund). Many of their funds have a 5 star rating from Morningstar. Some of Vanguard’s Mutual Funds are invested in so heavily that they have closed them to new people.
Vanguard’s broad array of mutual funds that are both actively managed and indexed are specifically designed to enable and support long-term investment. The fund’s policies, with strict rules protect the investor from costs arising due to short-term trading. The investor is provided with information and perspective which enable one to make smart decisions for investment and thereby increase the chances for a long-term success.
Under the supervision of a professional manager, mutual funds investment portfolios are regularly and continually adjusted. The professional manager forecasts the future performance of investments which will be appropriate for the fund thereby, choosing the ones believed to match closely the fund’s investment objective, such as long-term growth, high current income or the stability of principal. A fund may invest in stocks, bonds, cash investments or even a combination of these financial assets.
Vanguard’s ‘no load’ (meaning that the buyer pays no sales commission-called a ‘load’- when buying or selling the fund shares) mutual funds are very appealing and attractive to the educated investor who clearly knows and understands how much every percentage point counts.
Mutual funds have become very popular as they offer the investorfollowing advantages:
Diversification: A single mutual fund can hold securities from hundreds of issuers. This is far more than what most investors could be able to afford on their own. Serious losses due to problems in an industry or particular company are considerably reduced due to diversification.
Professional management: Investors who do not have the expertise or lack time to manage their personal investments, to be able to reinvest effectively the interest or dividend income or investigate the thousands of securities that are available in the financial market, prefer to rely on a mutual fund investment advisor. The advisor having access to the extensive research and market information decides which securities to buy and sell for the fund.
Liquidity: Investors have easy access to the money as shares in a mutual fund are bought or sold on any business day.
Convenience: Mutual fund shares can be bought or sold by mail, internet or through telephone, enabling the investor to be able to easily move money from one fund to another as and when the financial needs change. Most of the major mutual fund companies offer extensive recordkeeping services, which enable you to track your transactions if so desired, enable you to follow your fund’s performance and complete your tax returns.