Vanguard set to launch mega-cap mutual fund

Even though I would argue that the Vanguard Group is still the greatest financial services company in the world, it's amazing how far the firm has strayed from its founder Jack Bogle's original vision.

According to (subscription required) The Wall Street Journal, Vanguard is starting a new mutual fund that invests exclusively in mega-cap companies -- those with market caps from $3 billion to around $500 billion. According to The Journal, "Vanguard has filed with the Securities and Exchange Commission to launch the Mega Cap 300 Index, Mega Cap 300 Value Index and Mega Cap 300 Growth Index funds. The funds, which will be introduced in December, will track the market-capitalization-weighted MSCI US Large Cap 300 Index and its value and growth subsets."

Exchange-traded, institutional, and investor share classes will be available and, like most Vanguard funds, the expense ratios will be terrific.

I just don't get the point of these funds, and I certainly don't see why any investor would want to rush out and buy them. There aren't that many mega-cap stocks so diversification could be an issue and, all of the companies are already covered by traditional broad-based market index funds.

It seems that the more that traditional index funds are "improved," the more they shift away from the principles that guided Bogle when he invented the first index fund for individual investors in 1975.