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Monday, March 15, 2010

What Does Vanguarding Mean?

Reported by Daniel Tovrov

"Are you investing, or are you Vanguarding?" That's the question that a new ad campaign from Vanguard Group is asking would-be investors. Debuted today, the marketing effort is turning the company's name into a verb to solidify its core strategies in the minds of clients.

Vanguard hired ad agency Kirshenbaum Bond Senecal & Partners to help with the campaign, which cost an estimated $50 million, according to The New York Times. Vanguard spokeswoman Amy Chain declined to comment on the price.

Through the ads, the Valley Forge, PA-based company is focusing on investment principals such as low expense ratios, "prudent investing" and long-term growth strategies, as well as the firm's at-cost funds. One ad reads:

"Reacting to the stock market is just investing. Taking stock in the long term is Vanguarding."

The ads will primarily appear online, through financial news sites like CNN Money, and can currently be viewed on the YahooFinance homepage and on Vanguard.com, confirmed Chain. The campaign will also air on radio programs and hit print periodicals, such as The Wall Street Journal and The New York Times.

"It's a new way to talk about Vanguard's time-tested methods," Chain told The MFWire.

There is no planned end-date for the project, which Chain called an "on going, sustained effort."

Company Press Release

VALLEY FORGE, Pa. - Vanguard is embarking on a comprehensive campaign to highlight the company’s uniqueness in the investment management marketplace and to promote the investing best practices that it has emphasized since commencing operations in May 1975.

Through a multi-channel effort that will encompass online and print advertisements; educational content and tools on Vanguard.com; and other print materials, Vanguard will focus on its:

* At-cost investment offerings. Vanguard offers its funds on an at-cost basis, charging only what is necessary for the firm to provide high-quality investment management, administrative, and client services. This results in low fund operating and management costs. In 2009, the average expense ratio for Vanguard funds was 0.23%; industry-wide, the average expense ratio was 1.19% (Source: Lipper).

* Client-owned structure. Vanguard is set apart from the industry by its unique operating structure that aligns the interests of the company and its clients. Most investment firms are either publicly traded or privately owned. Vanguard is a client-owned organization. The firm is owned by the member mutual funds, which are owned by clients.

* Prudent investing principles. Vanguard has long emphasized prudent investing, based on the timeless principles of low costs, discipline, balance, diversification, and a long-term orientation.

"Vanguard is on a mission to lower the costs and complexity of investing, and we view it as our responsibility to educate investors about our way of investing," said Tim Buckley, Managing Director of Vanguard’s Retail Investor Group. "Vanguarding is our way of investing -- following sound principles, investing at-cost, and partnering with a client-owned firm.”

The Vanguarding messages will appear in prominent newspapers; personal finance, business, and general interest magazines; and on investment and personal finance websites. Vanguard.com will feature educational, interactive content focusing on four "Investing Truths"—risk, cost, time, and emotion. Materials for the campaign were created in partnership with New York-based Kirshenbaum Bond Senecal & Partners (KBS&P).

Vanguarding Works

Despite claims that the past ten years have been a “lost decade” (i.e., the broad U.S. stock market as measured by the Dow Jones U.S. Total Stock Market Index posted an average annual return of –0.25% over the ten years ended December 31, 2009), investors who adhered to the Vanguarding principles—investing regularly in a balanced portfolio of diversified funds—made progress in reaching their investment goals.

About Vanguard

Vanguard, headquartered in Valley Forge, Pennsylvania, is one of the world’s largest investment management companies and a leading provider of company-sponsored retirement plan services. Vanguard manages $1.36 trillion in U.S. mutual fund assets. Vanguard offers more than 160 funds to U.S. investors and more than 50 additional funds in non-U.S. markets.

Vanguard Marketing Corporation, Distributor All assets as of February 28, 2010. Vanguard provides services to the funds at cost.


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