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Vanguard Group Case

In: Business and Management

Submitted By highinthesky
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1. What do you think of the Vanguard group as a firm? What is the Vanguard group investment philosophy?
2. What are the key differences between Life-Style funds and Life-Cycle funds?
3. Discuss the pros and cons of Life-Style funds. Explain their rationale.
4. Discuss the pros and cons of Life-Cycle funds. Explain their rationale.
5. Are the Life-Style funds or the life-Cycle funds consistent with the theory (MeanVariance approach)?
6. Would you invest in either Life-Style or Life-Cycle funds? Why, why not?
Question 1: What do you think of the Vanguard group as a firm? What is the Vanguard group investment philosophy?
Vanguard was founded by John C. Bogle (Princeton University B.A., 1951) in 1975. Prior to
The Vanguard Group, John Bogle was part of Wellington Management Company. The
Vanguard Group currently manages about $3,148,496 million in assets (according to
Northern Trust “Asset Management Ranking Highlights: The Largest Money Managers”), which makes it the second largest money manager after BlackRock ($4,651,896M). The company is mostly focused on mutual funds and ETFs. Index funds were created and offered to individual investors, which introduced significant cost-savings benefits. Their trademark way of doing business is by heavily investing in technology, reducing management fees, and lowering marketing costs. Providing exceptional and exemplary client service has also been part of Vanguard’s repertoire. Mr. Bogle strongly believes in long-term investment strategy versus short-term. In “The Clash of Cultures: Investment vs
Speculation”, he criticizes money managers that are using short-term investment strategies in order to gain high returns, which turn out not to be as high after management fees and tax deductions. He refers to short-term speculative behavior in the markets as “The Wall Street
Casino”. Mr. Bogle gives an example…...

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