Largest Mutual Funds

The Vanguard 500 Index Fund

In the wake of the Investment Company Act of 1940, which was drafted by the SEC, a new period of increased confidence in the stock market came about. This law set the guidelines which all SEC-registered funds today must comply with, and paved the way for the huge increase in the growth of mutual funds.

By the closing of the 60s, there were about 270 funds in existence with almost $50 billion in assets between them. The first retail index fund, was established in 1976. The fund was called the First Index Investment Trust and was founded by John Bogle. Bogle actually developed many of the key concepts of the business in his senior thesis when he attended Princeton University in 1951. He is generally credited with the popularity of index funds, and bringing down the costs of mutual funds.

Today the First Index Investment Trust is called the Vanguard 500 Index Fund, and it stands as one of the largest mutual funds in the world. The company’s assets are currently valued at more than $100 billion.

Vanguard currently manages more than $1.3 trillion in assets, and offers mutual funds and as well as a variety of other financial products and services. The company’s services are offered to both individual and institutional investors, and are available in the United States and other countries.

Vanguard’s internal structure is a bit different than other mutual-fund companies since the company is owned by the funds themselves. In this type of model, each fund has a set contribution of its capital towards the various management, marketing, and distribution services. The company feels that is the best possible structure for ensuring better management of the shareholders’ interests. Because of their success, other mutual fund sponsors are gearing up to adopt Vanguard’s business structure, by leveraging themselves to make a profit for their owners as well as provide the best possible fund service to their shareholders.

Fidelity Magellan

While Vanguard is currently the largest mutual fund in the world, that was not always the case. Fidelity Magellan once wrested this position from Vanguard, but the company has since slipped into fifth place. This decline was the result of investors pulling out their money from the fund. It seems that investors were less than satisfied about the company’s service.

As of this year, USA Today reported that investors have pulled out more than $11 billion from Fidelity Magellan. This has caused a decline in the value of the company’s assets from a little more than $63 to just over $57 billion.

Fidelity Magellan did manage to hold on to its position as the country’s largest mutual fund until April 2000, when the Vanguard 500 Index fund finally surpassed it.

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