By Vanguard

Milestone marks five decades of expanding investor access, lowering costs, and helping millions build long-term wealth

VALLEY FORGE, Pa., Aug. 31, 2026 /PRNewswire/ -- Today marks the 50th anniversary of First Index Investment Trust, the fund that would become Vanguard 500 Index Fund. Its creation helped usher in a new era of investing by providing investors with broad market exposure through a simple, accessible approach. The fund launched on August 31, 1976, and sought to track the performance of the S&P 500 Index, providing investors with a low-cost way to own a broad cross-section of the U.S. stock market.

Over the past five decades, indexing has grown from a largely experimental concept into one of the most broadly accepted approaches in investing. Today, index funds and ETFs are used by millions of investors around the world and serve as core building blocks for retirement plans, advisory portfolios, education savings accounts, and other long-term investment strategies.

When Vanguard Founder John C. Bogle launched the fund, the indexing concept was met with considerable skepticism. At the time, low-cost investment strategies covering the broad stock market were not readily available to most investors, and many believed that successful investing depended on beating the market.

Mr. Bogle challenged that assumption, arguing that investors could achieve long-term success through broad diversification, low costs, and maintaining the discipline to stay invested through the inevitable ups and downs of the market. By owning the broad market at low cost, investors could keep more of their returns and harness the power of long-term compounding. Yet the concept was slow to gain traction. The fund raised just $11.3 million at its launch, far short of its $150 million target, underscoring how different the investing landscape was at the time.

"Fifty years ago, indexing challenged a deeply held assumption—that investors had to beat the market using high-cost active funds to achieve better investment outcomes," said Greg Davis, President and Chief Investment Officer of Vanguard. "By making broad market exposure simple, accessible, and low cost, indexing helped millions of individuals participate in the long-term growth of businesses and financial markets in ways that were previously out of reach."

A $10,000 investment in Vanguard 500 Index Fund at its launch in 1976 would have grown to more than $2.4 million by July 31, 2026.1 Through bull markets, bear markets, recessions, and recoveries, investors who stayed invested benefited from low costs and the compounding of returns over time.

The impact of indexing extends well beyond the funds themselves. As more investors embraced indexing, competition across the investment industry helped drive down costs, benefiting investors regardless of how they invest.

Indexing has helped investors retain more of their returns and remain focused on achieving their long-term financial goals. Vanguard estimates that since 2000, index investing has helped investors collectively save approximately $570 billion2 in investment fees.

"Few innovations have done more to expand access and help investors build wealth over time," said Mr. Davis. "The fundamental promise of indexing remains unchanged: broad diversification, low costs, and the power of staying invested for the long term. Long-term investment success is about helping investors stay focused on the things they can control."

Over the years following the launch of Vanguard 500 Index Fund, Vanguard continued to expand the reach of indexing beyond U.S. large-cap stocks, introducing index funds covering bonds, international equities, emerging markets, mid- and small-cap stocks, and growth and value stocks. Together, these funds enabled investors to build a wide range of broadly diversified portfolios benefiting from the low-cost, highly diversified, tax-efficient benefits that indexing offers.

The growth of indexing has also expanded investors' portfolio construction options. Today, many investors use index funds not only to gain broad market exposure, but also to build portfolios that reflect their preferences across asset classes, market capitalizations, sectors, and regions. In this way, index funds have become versatile building blocks for a wide range of portfolio construction strategies.

As 401(k) plans became a primary vehicle for retirement savings in the United States, index funds emerged as a foundational building block for millions of retirement portfolios. Over time, the growth of workplace retirement plans, the rise of exchange-traded funds, and the increasing complexity of global markets expanded the ways investors use index strategies.

While the tools and vehicles available to investors have evolved significantly over the past 50 years, the principles that inspired the first index mutual fund remain as relevant today as they were in 1976.

To commemorate the 50th anniversary of Vanguard 500 Index Fund, an original stock certificate from the launch of First Index Investment Trust in 1976 will be on display later this fall at the Museum of American Finance at its new location on Boston's waterfront.

To learn more about the history of indexing, please visit: 50 years. 50 facts. Indexing since 1976. To learn more about how indexing works and key benefits, please visit: About indexing. 

About Vanguard

Founded in 1975, Vanguard is one of the world's leading investment management companies. The firm offers investments, advice, and retirement services to tens of millions of individual investors around the globe—directly, through workplace plans, and through financial intermediaries. Vanguard operates under a unique, investor-owned structure where Vanguard fund shareholders own the funds, which in turn own Vanguard. As such, Vanguard adheres to a simple purpose: To take a stand for all investors, to treat them fairly, and to give them the best chance for investment success. For more information, visit vanguard.com.

1 Hypothetical cumulative growth of an initial $10,000 investment in Vanguard 500 Index Fund Investor Shares on December 31, 1976, through July 31, 2026. Hypothetical ending value on July 31: $2,477,941. The performance data shown represent past performance, which is not a guarantee of future results. Investment returns and principal value will fluctuate, so investors' shares, when sold, may be worth more or less than their original cost. Current performance may be lower or higher than the performance data cited. The performance of an index is not an exact representation of any particular investment, as you cannot invest directly in an index.

Source: Vanguard

2 Data as of December 31, 2025, for U.S.-domiciled mutual funds and ETFs, based on annual reported net expense ratios. In this hypothetical example, we assume that, if index funds had not existed, index investors would have invested in active funds charging the then-prevailing, asset-weighted average active fund expense ratio. Data reflect the difference between the cumulative expense ratio fees paid by investors owning open-end funds and what they would have paid if index funds didn't exist. Investor savings are calculated as: (asset-weighted expense ratio of actively managed funds multiplied by industry assets) minus (asset-weighted expense ratio of index funds multiplied by industry assets). This hypothetical example does not represent any particular investment and the rate is not guaranteed.

Source: Vanguard calculations, using data from Morningstar, Inc.

For more information about Vanguard funds and Vanguard ETFs, visit vanguard.com to obtain a prospectus or, if available, a summary prospectus. Investment objectives, risks, charges, expenses, and other important information are contained in the prospectus; read and consider it carefully before investing.

Vanguard ETF Shares are not redeemable with the issuing Fund other than in very large aggregations worth millions of dollars. Instead, investors must buy and sell Vanguard ETF Shares in the secondary market and hold those shares in a brokerage account. In doing so, the investor may incur brokerage commissions and may pay more than net asset value when buying and receive less than net asset value when selling.

All investing is subject to risk, including the possible loss of the money you invest. Diversification does not ensure a profit or protect against a loss.

Vanguard Marketing Corporation, Distributor.

 

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SOURCE Vanguard