Forget Kaepernick—John Bogle was once accused patriotic malfeasance, and was recently called a commie (seriously).
It might be 40th anniversary of the of the launching of the first index mutual fund by Vanguard, but the investment legend and conscience of the industry pulled no punches (as usual) when describing those early years.
“In 1975 and 1976, indexing didn’t really account for much, and some people actually called it un-American,” Bogle told 401(k) Specialist. “In 1995, it was 6 percent of invested assets and today it’s 72 percent of invested assets. Higher-cost funds have reached economies of scale that are still not shared with the average investor. They’re not getting their fair share of the return. If you don’t believe me, ask Bill Sharpe.”
In an odd throwback to Cold War slurs, The Wall Street Journal’s Holman Jenkins pointed to a recent research report from Sanford Bernstein that called passive investing “worse than Marxism.”
Jenkins colleague, the indispensable Jason Zweig, noted that Bogle’s fund was introduced with $11.3 million in assets, far short of the $150 million target that Bogle had planned.
“The investment banks underwriting the fund were so disappointed by the measly amount they had raised that they wanted to give investors their money back,” Zweig wrote.
“Hell no,” was Bogle’s response in typical Jack-style.
Today, Vanguard 500 Index Fund holds more than $252 billion. Index mutual funds and exchange-traded funds invest nearly $5 trillion in combined assets and are considered a staple of long term investing.
Bogle, that unpatriotic Marxist, might be on to something.