as the corporate parents, and General Motors as a subsidiary. The best way to describe VanguardвЂ™s unique structure would be to think of General Motors turned upside down, with Chevrolet, Cadillac, Oldsmobile, Pontiac, etc. (VGI) is actually a subsidiary of the various mutual funds, each of which is a separate legal entity. Here is an excerpt from Mel Lindauer of the Diehards forum, which explains this setup well:ДЇirst, The Vanguard Group Inc. In turn, that mutual fund is a separate entity that contributes money to fund VanguardвЂ™s operations, instead of the other way around. How this works is that each of us might own a share of a mutual fund like VFINX. In addition, one of the features specific to Vanguard is that it is set up as client-owned. If the fund company goes bankrupt, the assets would remains the same, one would just have to hire a new company to manage it. The way I read this, mutual fund managers are interchangeable. And the fundвЂ™s directors could immediately hire a new manager, pending shareholder approval. If the company were to file for bankruptcy, its creditors would not be able to touch the fundsвЂ™s assets. Essentially, your fund hires the fund company to manage its assets. Under the Investment Company Act of 1940, which governs the industry, each fund is set up as an individual corporate entity, with its own board of directors. One source of information is this 2004 Money magazine article written shortly after previous mutual fund scandals: What happens if one of them вЂњpulls an EnronвЂќ or simply runs out of money? Continuing on the line of thinking started by my post on What if my bank fails?, the next question might be what if my mutual fund company went bankrupt? I mean, I have a lot of money in Vanguard and Fidelity right now.

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