Vanguard founder Jack Bogle passes away

There was nothing passive about the father of passive index investing.

Alec Lucas, Ph.D. 16 January, 2019 | 6:00PM Morningstar

Admirers called John C. "Jack" Bogle bold, visionary, principled, scrupulous, industrious, meticulous, magnanimous, inexhaustible, unyielding, thrifty, faithful, and relentlessly optimistic. Detractors (and even some friends) found him ambitious, prideful, obstinate, severe, competitive, combative, cantankerous, censorious, cheap, self-righteous, and self-aggrandizing. 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. Bogle, a tireless advocate for individual investors and business ethics, died Wednesday, Jan. 16. He was 89.

By now the arc of Bogle's life story and career are as well known to anyone familiar with mutual funds or investing as a family legend that gets told and retold at gatherings and reunions. There was the Fortune magazine article "Big Money in Boston" that introduced Bogle to the nascent mutual fund industry and inspired his Princeton undergraduate thesis. That paper caught the eye of Wellington Management founder Walter Morgan, who took Bogle under his wing in 1951 as a protege. Then there was Bogle's infamous falling out with Wellington in 1974 that lead to the founding of Vanguard, the first and still only mutually owned mutual fund family. Then in 1976 Bogle and Vanguard launched the first retail index fund, now known as Vanguard 500 Index (VFINX), which was borne of the simple yet controversial insight that by buying and holding the stock market at low cost, investors could do better than most active managers. A year later Vanguard started selling its funds directly to investors, which helped foster no-load mutual funds.

Ultimately Vanguard became one of the largest money managers in the world with about US$5.3 trillion under management as of September 2018. More importantly to Bogle, Vanguard grew to be widely admired for its low costs, sober strategies, and shareholder friendliness. Indeed, when scandal and bear markets tarnished other mutual fund families in the early 2000s, Vanguard flourished. Similarly, though the family's assets took a hit in 2007 to early 2009 collapse, net new inflows continued almost uninterrupted throughout. Millions of investors are better off because of Bogle's innovations and adherence the notions that investing should be as cheap as possible and for the long term. Investors who put US$10,000 in the Vanguard 500 on Aug. 31, 1976, for example, had about US$790,000 by Jan. 15, 2019.

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About Author

Alec Lucas, Ph.D.

Alec Lucas, Ph.D.  Alec Lucas is a senior manager research analyst for Morningstar.