John Bogle, the engineer behind low-cost investing, had admirers globally, including Warren Buffett

Bogle, born on May 8, 1929, in New Jersey, took his last breath in Pennsylvania. He was 89.

John Bogle, the engineer behind low-cost investing, had admirers globally, including Warren Buffett
NEW DELHI: Vanguard founder John Clifton Bogle, who passed away on Wednesday, introduced world’s first-ever index fund for retail investors.

The US-based Vanguard Group manages $5.1 trillion in assets, 70 per cent of which came from index funds.

Known as ‘father of indexing’, Bogle launched First Index Investment Trust in 1976, but the initial response was tepid. But over the years, the index fund, now known as Vanguard 500 Index Fund, grew into a $400 billion fund.


Bogle was instrumental in breaking the industry tradition by offering funds directly to investors in 1977, instead of marketing them through broker chain, thus bringing down cost in the US MF industry by 30-40 per cent.

Bogle, born on May 8, 1929, in New Jersey, took his last breath in Pennsylvania. He was 89.

He was so respected that Warren Buffett, while addressing the 53rd annual general meeting of Berkshire Hathaway in 2017, thanked him for saving billions of dollars of investor money by creating the index fund.
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Focus on lowering cost
In one of his famous sayings, he said: “One should not let the miracle of long-term compounding of returns be overwhelmed by the tyranny of long-term compounding of costs.”

Bogle, in a recorded interview at Morningstar Investors Conference last year, argued that if the cost of investing is 2 per cent and the total gross return is 7 per cent, it would cost dear to investors in the long term.

The math works somewhat like this. Compounding one dollar at 7 per cent for 50 years can make an investor $32. But a 2 per cent ‘little cost’ of investing will lower net return to 5 per cent and the investor could only make $11 dollar in 50 years, he had said.

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Also Read: Vanguard has driven the cost on the fund side down: Jack Bogle

Dividend investor’s best friend
Bogle wrote in his book The Little Book Of Common Sense Investing that dividends are an investor’s best friend. He believed that in the long run, corporate earnings and dividend yield drive stock prices.
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He also suggested that an investor must consider his financial as well as emotional abilities to withstand risk while deciding asset allocation.

Asset allocation should be in tune with emotional qualities, Bogle had said in the Morningstar interview.

“He was a tremendously intelligent, driven, and talented visionary whose ideas completely changed the way we invest,” Vanguard CEO Tim Buckley said in a release.

Bogle’s active years
Bogle began his career in 1951 after graduating from Princeton University. His senior thesis on mutual funds attracted Wellington Fund founder Walter L Morgan, the introducer of the oldest balanced fund in US.

Soon, Bogle became the driving force behind Wellington’s growth into a mutual fund family. He persuaded Morgan to start an equity fund in the late 1950s. Later in May 1975, he founded Vanguard Group of Investment Companies.

In December 1999, he stepped down from the Vanguard board of directors and created the Bogle Financial Markets Resource Center, a Vanguard-supported venture.

Bogle penned several books between 1993 and 2018. His book Common Sense on Mutual Funds: New Imperatives for the Intelligent Investor is a bestseller and is considered a classic by the investment community.

He also contributed to articles and commentaries for trade and business publications. Here are a few famous quotes by Bogle.




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