There is a useful piece in the current San Francisco magazine describing the rise of index funds. Its hook is the Google IPO, and the company’s attempts to indoctrinate Googlers in the perils of active fund management, mutual funds, and so on.
As Google’s historic August 2004 IPO approached, the companyâ€™s senior vice president, Jonathan Rosenberg, realized he was about to spawn hundreds of impetuous young multimillionaires. They would, he feared, become the prey of Wall Street brokers, financial advisers, and wealth managers, all offering their own get-even-richer investment schemes. Scores of them from firms like J.P. Morgan Chase, UBS, Morgan Stanley, and Presidio Financial Partners were already circling company headquarters in Mountain View with hopes of presenting their wares to some soon-to-be-very-wealthy new clients.
Rosenberg didnâ€™t turn the suitors away; he simply placed them in a holding pattern. Then, to protect Googleâ€™s staff, he proposed a series of in-house investment teach-ins, to be held before the investment counselors were given a green light to land. Company founders Sergey Brin and Larry Page and CEO Eric Schmidt were excited by the idea and gave it the go-ahead.