Yahoo Finance One of the world's greatest investors has died
The founder of the US$5.1 trillion (AU$7.11 trillion) Vanguard Group and “father of index investing”, Jack Bogle, has died of cancer at age 89.
His family confirmed Bogle died Wednesday at home in Philadelphia, USA to The Philadelphia Inquirer.
Bogle launched Vanguard Group in 1975, where he pioneered low-cost index and mutual funds. Today, Vanguard is the largest provider of mutual funds and the second-largest provider of exchange-traded funds (ETFs) after BlackRock.
He founded the company as an independent, client-owned company.
“Jack Bogle made an impact on not only the entire investment industry, but more importantly, on the lives of countless individuals saving for their futures or their children’s futures,” Vanguard chief executive Tim Buckley said in a statement on Wednesday.
“He was a tremendously intelligent, driven, and talented visionary whose ideas completely changed the way we invest. We are honoured to continue his legacy of giving every investor ‘a fair shake.’”
Why he was Buffett’s hero
Billionaire investor and founder of Berkshire Hathaway, Warren Buffett, said in his March 2018 annual letter that Bogle ought to have a statue constructed in his honour.
“In his early years, Jack was frequently mocked by the investment-management industry. Today, however, he has the satisfaction of knowing that he helped millions of investors realise far better returns on their savings than they otherwise would have earned. He is a hero to them and to me.”
Bogle said the secret to investment success was to make “common sense” decisions and let the index do the rest.
Speaking to Reuters in 2012, he said discipline and saving are also critical.
“Invest as efficiently as you can, using low-cost funds that can be bought and held for a lifetime. Don’t go chasing past performance, but buy broad stock index and bond index funds, with your bond percentage roughly equaling your age.
“Most of all, you have to be disciplined and you have to save, even if you hate our current financial system. Because if you don’t save, then you’re guaranteed to end up with nothing.”
Bogle was also unafraid of speaking out about the widespread underperformance of active fund managers. While he acknowledged the role of active managers, he told the Australian Financial Review in 2016 that their time in the sun is over.
“Past performance is pretty much irrelevant. Funds that do well tend to do badly in the future and funds that do badly tend to do well. If you have high costs, you do even worse.
“They’re in business to make a profit for themselves. That’s the structural flaw of this business. They should have looked at Luke 16: ‘No one can serve two masters’.”
The investor was also credited with helping shine a light on the performance and costs of mutual funds.
He told the US National Investment Company Services Association in 1987 that mutual fund organisations should consider themselves to be more than a “mere industry”.
“We must hold ourselves to higher standards, standards of trust and fiduciary duty. Change we must—in our communications, our pricing structure, our product, and our promotional techniques.”
Bogle is survived by his wife Eve and six children.
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