In our own quiet way, we’re celebrating 35 years of indexing at Vanguard this year. (Hey, you wouldn’t expect party hats and champagne at Vanguard!)
Indexing is an amazing success story—and not just at Vanguard. From a controversial, much-derided idea back in 1976, index investing has grown to be a widely accepted investment approach today.
In 1976, Vanguard launched its 500 Index Fund, making it the first index mutual fund available to non-institutional investors. The creation of an index fund intended for individual investors was an important salvo in the now long-running battle over which investing approach—active or passive—is superior.
This is a 35-year-old fight (at least) that I certainly don’t think I can settle. But in discussions of the issue over the years, I’ve found that a few points are really critical, and often not appreciated by more casual participants.
