John C. Bogle’s financial innovations were reviled and ridiculed at first, but for decades now the low-fee index funds he pioneered have enabled millions of ordinary Americans to build wealth to buy a home, pay for college, and retire comfortably.
John C. Bogle’s financial innovations were reviled and ridiculed at first, but for decades now they have enabled millions of ordinary Americans to build wealth to buy a home, pay for college and retire comfortably.
Mr. Bogle, who championed the interests of the small investor, and railed against corporate greed and the excesses of Wall Street, died of cancer at age 89 Wednesday at his home in Bryn Mawr, Pennylsvania.
A chipper and unpretentious man who invited everyone to call him “Jack,” he was founder and for many years chairman of the Vanguard Group, the Malvern, Pennsylvania-based mutual-fund company, where he pioneered low-cost, low-fee investing and mutual funds tied to stock-market indexes.
Along the way, Vanguard, which Mr. Bogle launched in 1974, became a titan in the financial-services industry, with 16,600 employees and over $5 trillion in assets by the end of 2018, and Mr. Bogle earned a reputation as not only an investing sage but a maverick whose integrity and old-fashioned values set an example that many admired and few could match.
“Jack could have been a multibillionaire on a par with Gates and Buffett,” said William Bernstein, an Oregon investment manager and author of 12 books on finance and economic history. Instead, he turned his company into one owned by its mutual funds, and in turn their investors, “that exists to provide its customers the lowest price. He basically chose to forgo an enormous fortune to do something right for millions of people. I don’t know any other story like it in American business history.”
In 1999, Fortune named Mr. Bogle one of the investment industry’s four giants of the 20th century, and in 2004, Time listed him among the 100 most influential people in the world.
Motivated by a mix of pragmatism and idealism, Mr. Bogle was regarded by friends and foes alike as the conscience of the industry and the sheriff of Wall Street.
“He was like the last honorable man, a complete straight-shooter,” said Rick Stengel, former managing editor of Time and former president of the National Constitution Center, where he worked closely with Mr. Bogle when he chaired the center’s board. He was fond of saying that “‘so-and-so is all hat and no cattle.’ Jack was all cattle and not very much hat.”
More than a successful businessman, Mr. Bogle was a capitalist with a soul.
“Whatever moral standards I may have developed over my long life, I have tried to invest my own soul and spirit in the character of the little firm that I founded all those years ago,” he wrote in his 2008 book, “Enough: True Measures of Money, Business, and Life.”
While Mr. Bogle was facile with numbers, he was much less interested in counting than in what counts, and his intellectual range was broad. He revered language, history, poetry and classical wisdom, and frequently amazed and delighted people by reciting long passages of verse. He was the author of at least 10 books, mainly about investing — all of which he proudly wrote himself.
He was a social critic, civic leader, mentor and philanthropist whose generosity to the institutions that shaped his character, notably Blair Academy and Princeton University, far outstripped his legendary frugality.
In his 70s, he displayed the energy of men half his age, and his pace and ambition were the more remarkable because of his lifelong battle with heart disease, the result of a congenital defect that affected the heart’s electrical current.
Mr. Bogle had his first heart attack in 1960, when he was only 30, and his heart stopped numerous times thereafter. When he was 37, his doctor advised him to retire. Mr. Bogle’s response was to switch doctors.
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Mr. Bogle outlived three pacemakers, and kept a gym bag with a squash racket near his desk. In 1996, surgeons at Hahnemann University Hospital replaced his faulty heart with a strong one, ending a 128-day wait in the hospital. He reunited with his doctors years later.
With his new pump, Mr. Bogle experienced an adolescent surge of vitality that left associates panting to keep up.
“Jack operated at only two speeds, as fast as is humanly possible and stop,” said Paul Miller, the late private investor and founding partner of Miller Anderson & Sherrerd, who was a close friend of Mr. Bogle’s for decades.
“He was fiercely competitive when it counted, more intellectually alert than any person I’ve ever met, willing to face — indeed, almost court — controversy and criticism, stubborn but willing to compromise when absolutely necessary, and most important, loving, sentimental, kind, charitable and courageous.”
His greatest accomplishment, Mr. Bogle often said, was “putting the ‘mutual’ back in mutual funds.” His most important innovation was the index fund.
Mr. Bogle had long argued that a mutual fund representing a broad range of businesses — for instance, the Standard & Poor’s 500, an index containing the stocks of 500 large publicly held U.S. companies — would not only match the market’s average return but also generally surpass the performance of actively managed funds.
“You want to be average and then win by virtue of your costs,” Mr. Bogle said. “Cost is a handicap on the horse. If the jockey carries a lot of extra pounds, it’s very tough for the horse to win the race.”
That philosophy attracted a following, including a group of grateful devotees who called themselves the Bogleheads, and convened annually to swap investment advice and pay homage to the man who had done so much to nourish their portfolios.
Mr. Bogle had hoped that the Vanguard model — “structurally correct, mathematically correct and ethically correct” — would goad other investment firms to give customers a fairer shake. While index funds have become widely popular, Vanguard’s competitors often have been less than keen about following the company’s penny-pinching lead.
Nevertheless, Mr. Bogle, to use a pet phrase, “pressed on regardless.” After retiring as Vanguard’s chairman and CEO in 1996 and its senior chairman in 2000, he became president of the Bogle Financial Markets Research Center, quartered in the Victory Building on the Vanguard campus.
When he was not touting the advantages of the Vanguard mode of investing, Mr. Bogle, a self-proclaimed “battler by nature,” was lambasting his professional brethren for “rank speculation,” reckless assumption of debt, “obscene” multimillion-dollar paychecks and golden parachutes, and saying they had abdicated their duty as stewards in favor of self-interested salesmanship.
Along the way, Mr. Bogle attracted his share of critics. He was called a communist, a Marxist, a Bolshevik, a Calvinist scold and zealot, a holier-than-thou traitor and subversive who was undermining the pillars of capitalism with un-American rants.
Mr. Bogle characterized his pugnacious relationship with the financial industry as “a lover’s quarrel.” His mission, he said, was simple: to return capitalism, finance and fund management to their roots in stewardship.
John Clifton Bogle early realized the value of a penny. His grandfather, a prosperous merchant, founded a company that became part of the American Can Co., and Mr. Bogle’s early years in Montclair, New Jersey, were affluent. Then came the Great Depression, which erased the family fortune. Mr. Bogle’s father, an improvident charmer, was ill-equipped to cope. The Bogles lost their home and were forced to move in with relatives.
Mr. Bogle attended Blair Academy in northwestern New Jersey, where he blossomed academically. From there, he went to Princeton, which offered him a full scholarship and a job waiting tables in the dining hall. At first, Mr. Bogle floundered, and his low grades in economics, his major, almost cost him his scholarship. But he applied himself and slowly mastered the demands.
In December 1949, while leafing through Fortune, he happened upon an article about the embryonic mutual-fund industry, and Mr. Bogle had a topic for his senior thesis.
Mr. Bogle produced a scholarly opus that proved to be a blueprint for his career. “The principal function of mutual funds is the management of their investment portfolios,” Mr. Bogle wrote. “Everything else is incidental. … Future industry growth can be maximized by a reduction of sales loads and management fees.”
The thesis earned Mr. Bogle a top grade, and he graduated magna cum laude. After he sent a copy to Walter Morgan, Class of 1920 and founder of the Wellington Fund, based in Philadelphia, Morgan hired Mr. Bogle. In short order, Morgan became Mr. Bogle’s mentor. In early 1965, when Mr. Bogle was only 35, Morgan anointed him his successor.
Headstrong and impulsive, Mr. Bogle arranged a merger with highflying investment managers in Boston. For six go-go years, the partnership flourished, but when stock prices plunged in 1974, Mr. Bogle was fired.
Refusing to surrender, Mr. Bogle persuaded the board of Wellington to split from the management company that canned him and appoint him to administer the funds at cost, thereby saving a bundle in fees.
Inspired by the 1798 Battle of the Nile, during which Lord Nelson sank the French fleet, snuffing Napoleon’s dream of world conquest, Mr. Bogle chose the name Vanguard after Nelson’s flagship.
Now one of the world’s largest investment-management companies, Vanguard vies with BlackRock and Fidelity Investments for the title of biggest mutual-fund group.
If Vanguard runs a tight ship, it’s a direct reflection of its founder. When traveling, Mr. Bogle usually took the train or flew coach. From the station or airport, he walked to his destination rather than taking a cab, or hailed a cab rather than riding in a limo, even in his 70s.
In addition to his son and daughter, Mr. Bogle is survived by his wife, the former Eve Sherrerd, whom he married in 1956; children Jeanne Bogle England, Nancy Bogle St. John, Sandra Hipkins Bogle, and John C. Bogle Jr., and at least 12 grandchildren. His twin brother David died in 1995. A private service will be held next week.