As you probably know, we at the Fool have for many years advocated index mutual funds for most investors. They offer a simple way to invest in much of the market all at once, and if you select your index funds carefully, they're an exceedingly inexpensive way to invest, too. Vanguard, the firm that through leader John Bogle pioneered index funds, has charged among the lowest fees for its funds -- such as the extremely popular Vanguard 500 Index Fund (FUND:VFINX). (Fidelity Investments has recently joined the low-cost club, as Seth Jayson recently reported.)

Part of the reason that Vanguard managed to succeed with low costs was that it enjoyed high volume. In some 20-plus years, its mutual fund assets increased from $1.4 billion to $730 billion -- an increase of 52,000%. (Jeepers!) This is not unlike Wal-Mart's (NYSE:WMT) business model. Its profit margins, around 3%, are low compared with many other companies (though quite respectable for a retailer), but its volume is so high that it still manages to rake in $9 billion annually in net income, from more than a quarter of a trillion dollars in sales.

The business-minded reader might now be wondering how Vanguard marketed itself in order to generate such gains. Wonder no more. John Bogle offered insights in a speech earlier this year. Some tidbits:

  • "Vanguard has never much liked to spend unnecessary money.... Indeed, at the very outset, I drummed into the character of our Vanguard crew that our first rule of marketing would be: 'Market share must not be bought; it must be earned' -- earned by providing superior investment returns, earned by excellence in investor services, earned by winning the trust of investors."

  • "The second rule was, 'market share is not an objective, it is a measure.' I not only had no interest in buying our market share with costly advertising and marketing campaigns, but no interest in building it by introducing new funds that simply reflect the fads and fashions of fickle stock markets."

  • "If market share grows organically, unforced by costly advertising and opportunistic marketing, that growth is likely telling the world that something good is going on: that investors like what you are doing and are willing to put their money where their mind is -- entrusting their hard-earned assets to your care."

  • "But there is one more thing that has fostered Vanguard's growth. I called it 'candor as a marketing strategy,' making sure that we carefully explain, not merely the rewards of investing, but the risks; not merely the value of investing, but the costs; not claiming superior ability to manage money but stressing the limitations imposed by the tough real world; and above all, doing our best to tell the truth -- the whole truth and nothing but the truth -- in reporting our investment results to our shareholders and in defining our strategies and our policy positions."

Bogle's proof is in the pudding: Between 1981 and 2004, Vanguard's market share of mutual fund assets swelled from 1.7% to 9.6%.

Learn more about index funds in our Mutual Fund Center. And if you're interested in doing better than the average performance offered by index funds, check out a free copy of our Motley Fool Champion Funds newsletter. There are some funds out there with solid track records and impressive managers, and we're eager to introduce you to them.

Longtime Fool contributor Selena Maranjian owns shares of Wal-Mart.