US fund tops $100 billion mark
The Vanguard Group’s 500 Index Fund has become the second managed fund to reach the US $100 billion mark in assets under management, according to Bloomberg.
The Vanguard Group’s 500 Index Fund has become the second managed fund to reach the US $100 billion mark in assets under management, according to Bloomberg.
The 23 year old fund, which is based on the benchmark Standard & Poor’s 500 Index (S&P 500), is second in size only to Fidelity’s Magellan fund. The 500 Index Fund ended November with US$98.2 billion in assets. A 2 per cent gain in the S&P 500 this month has added about US$2 billion to the fund, with net sales taking the total well over US$100 billion.
The Vanguard fund attracted US $12 billion in new money in the year to October, up from US $9.4 billion last year. According to Boston-based Financial Research Corporation, this US $9.4 billion constituted the fund’s previous best-ever period in net sales.
The recent popularity of index funds has been due to the lack of success of active fund managers to track the S&P 500, according to industry commentators. Only 15 percent of active stock fund managers beat the S&P last year and 30 percent in the first half of this year.
Vanguard's 500 Index Fund now has about US $15 billion more in assets than all stock funds at the end of 1985, according to US managed fund industry trade association, the Investment Com-pany Institute. Total managed fund assets now exceed US $6 trillion.
Vanguard, the second biggest U.S. fund manager behind Fidelity, has always been the leader in managing and championing the benefits of low-cost indexing. It has been the industry’s leading seller of managed funds for the past three years. The 500 Index, managed since 1987 by Gus Sauter, dwarfs all Vanguard's other index offerings.
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