Vanguard
Vanguard was started by John Bogle, who had a cult following similar to Warren Buffett’s. Bogle’s research showed that no actively managed mutual funds beat their benchmark for more than two years in a row but were still charging 1% or more per year to manage the mutual funds. Because of this, Bogle invented Index Funds that had all the same stocks as the benchmarks; therefore, he did not need to actively manage them. Vanguard has 17,600 employees worldwide and offers 170 mutual funds and 80 Exchange Traded Funds (ETFs). There is a fund to meet every investor’s interest and risk tolerance. The good thing about Vanguard is that their average mutual fund fee is 0.10%. The industry average mutual fund fee is 0.63%. The owners (that is, the customers) of the Vanguard Funds own the company. The low fees at Vanguard are possible because the fees only have to cover the salaries of the Vanguard employees plus the overhead of the buildings, utilities, and other operating costs. Vanguard does not have to generate any profit over and above its expense to run the funds.
TIAA
The Teachers Insurance and Annuities Association (TIAA) and its sister organization, College Retirement Equities Fund (CREF) both offer insurance, annuities, and mutual funds to individuals. TIAA used to be identified as TIAA-Cref but in the past few years has shortened its acronym to TIAA. It has 17,500 employees and manages approximately $1 trillion in accounts. Although TIAA started out as an insurance company and retirement fund manager for teachers, anyone can now use its services. Similar to Vanguard, TIAA offers over 100 mutual funds. However, reviews from some investment websites claim that TIAA’s mutual fund management fees are somewhat higher than Vanguard’s.