John C. Bogle, the father of index investing and founder of The Vanguard Group, died Wednesday in Bryn Mawr, Pennsylvania. He was 89.
Bogle introduced the first index mutual fund in 1975, coined “Bogle’s Folly” by critics and derided as unamerican for its new, passive approach.
He appeared on the cover of 401(k) Specialist in 2015 to decry high 401k fees and advocate for the Department of Labor’s fiduciary rule.
“In 1975 and 1976, indexing didn’t really account for much, and some people actually called it un-American,” Bogle said in the interview. “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.”
Today, what is now the Vanguard 500 Index Fund has $441 billion in assets (the sister fund, Vanguard Institutional Index Fund, has $221.5 billion in assets). Index funds account for more than 70 percent of Vanguard’s $4.9 trillion in assets under management.
Bogle began his career in 1951 after graduating magna cum laude in economics from Princeton University.
According to Vanguard, his senior thesis on mutual funds had caught the eye of fellow Princeton alumnus Walter L. Morgan, who had founded Wellington Fund, the nation’s oldest balanced fund, in 1929 and was one of the deans of the mutual fund industry.
Morgan hired the ambitious 22-year-old for his Philadelphia-based investment management firm, Wellington Management Company.
A management dispute years later led him to form Vanguard in September 1974.
To describe his new venture, Bogle coined the term “The Vanguard Experiment.” It was an experiment in which mutual funds would operate at cost and independently, with their own directors, officers, and staff—a radical change from the traditional mutual fund corporate structure, whereby an external management company ran a fund’s affairs on a for-profit basis.
In 1976, Vanguard introduced the first index mutual fund—First Index Investment Trust—for individual investors.
In December 1999, he stepped down from the Vanguard board of directors and created the Bogle Financial Markets Resource Center.
Bogle worked as the center’s president—analyzing issues affecting the financial markets, mutual funds, and investors through books, articles, and public speeches—until his death. He wrote 12 books, selling over 1.1 million copies worldwide.
Bogle was born May 8, 1929, in Montclair, New Jersey.
He married Eve Sherrerd in 1956. They had six children: daughters Barbara Bogle Renninger, Jean Bogle, Nancy Bogle St. John, and Sandra Bogle Marucci, and sons John C. Bogle Jr. and Andrew Armstrong Bogle. They had 12 grandchildren and six great-grandchildren.
With more than 20 years serving financial markets, John Sullivan is the former editor-in-chief of Investment Advisor magazine and retirement editor of ThinkAdvisor.com. Sullivan is also the former editor of Boomer Market Advisor and Bank Advisor magazines, and has a background in the insurance and investment industries in addition to his journalism roots.
