The Vanguard Group introduced the first index mutual fund for individual investors in 1976. The fund was called the First Index Investment Trust and is now known as the Vanguard 500 Index Fund.
John C. Bogle created the fund after studying how difficult it was for actively managed mutual funds to beat broad market indexes once management costs were included. The new fund sought to track the S&P 500 rather than rely on managers to select individual winning stocks. Its passive design was inexpensive and broadly diversified.
The idea was widely mocked at first. The fund raised only about $11 million in its initial public offering, far below the roughly $150 million expected, and critics derided it as “Bogle’s Folly.” Bogle refused to cancel it. Assets later grew as investors and institutions recognized the value of low costs and market-wide exposure.
Earlier index funds had existed, including institutional offerings associated with Wells Fargo, American National Bank of Chicago and Batterymarch. The important distinction is access: Vanguard’s 1976 product was the first index mutual fund aimed at individual, or retail, investors. That is why Vanguard—not merely Bogle personally—is the standard quiz answer.