World's second richest man pays tribute to most influential investor in history

Andrew Cummings
January 20, 2019

John Bogle, establisher of Vanguard Group and creator of index mutual fund, passed away on Wednesday in Bryn Mawr, Pennsylvania, aged 89.

He once put it in a nutshell: "Don't look for the needle in the haystack".

All agreed, however, that the founder of Vanguard and creator of the first retail index mutual fund was a man of irreproachable integrity and inexhaustible energy who profoundly changed the mutual fund industry and investing for the better.

The 2007-2009 financial crisis buttressed Bogle's view that in the long run low-priced passive vehicles hold fundamental cost advantages over actively managed funds.

"In his early years, Jack was frequently mocked by the investment-management industry".

Most notably he inspired an entire movement of individual investors, known as the Bogleheads, in whose founding and development played no small part, who found him more messianic than Quixotic and regarded his investment philosophy as gospel and his every utterance as sermons from the mount.

Today, Vanguard is the largest mutual fund company in the world with $5.3 trillion under management on behalf of 20 million investors in 170 countries.

Bogle's 1999 book "Common Sense on Mutual Funds" is considered one of the most important texts on mutual fund investing.

"Our challenge at the time", Bogle said later, "was to build, out of the ashes of major corporate conflict, a new and better way of running a mutual fund complex".

"The mutual fund industry lost its way because of the triumph of managers' capitalism over owners' capitalism", Bogle wrote in a typically fiery passage in his 2005 book "The Battle for the Soul of Capitalism".

He chose the name in honor of the HMS Vanguard, Lord Nelson's ship in the British victory over the French in 1798.

Bogle - whose ideas of low-priced investing for individual investors were widely derided at the time - wrote in a book about his life published late a year ago that he almost failed out of Princeton University and was sacked from his first firm, Wellington Management Company. The company has about 4.9 trillion USA dollars in global assets under management and serves more than 20 million investors in about 170 countries.

Vanguard was a unique entity, structured to be owned by its the shareholders in its funds rather than outside stockholders or private owners. The company ended its reliance on outside brokers and instead began directly marketing its funds to investors without charging upfront fees known as sales loads.

He left after a management dispute in 1974 and started Vanguard.

After retiring to run the Bogle Financial Markets Center on Vanguard's Malvern, Pa. campus, he often took his successors to task for launching ETFs, adopting aggressive funds, and creating managed pay-out funds and other innovations. "I do not believe that such concentration would serve the national interest", he wrote in the Wall Street Journal.

John Clifton Bogle was born in Montclair, New Jersey, on May 8, 1929.

With his wife Eve Sherrerd, whom he married in 1956, Bogle had six children, 12 grandchildren and six great-grandchildren.

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