Who is Jack Bogle?
It’s the man that, over 40 years ago, started the Vanguard Group. It’s also the inventor of the index fund, something that changed forever the investing landscape in the US and in the World.
Bogle was born in the US (Montclair, New Jersey) on May 8, 1929.
1950: Graduated from Princeton and then landed a job helping to manage the famous Wellington Fund.
1955: Was promoted to an assistant manager position in the Wellington Fund.
1970: Replaced Walter L. Morgan as chairman of Wellington.
1974: Bogle founded the Vanguard Company.
1976: Based on the works of Paul Samuelson, Bogle founded First Index Investment Trust (a precursor to the Vanguard 500 Index Fund).
1996: His role as Vanguard CEO ended.
When Bogle created the first index fund, he enabled millions of people to invest in a low-cost, broadly diversified basket of stocks. Today Vanguard Group is one of the biggest asset managers in the world. Here are the numbers (2017):
- Total Assets: $4.5 trillion
- The share of Industry Assets: 24.1%
- Fund Fees: 0.10%
- Inflows: $359 Billion
- Number of funds: 149
- Index Funds as % of Assets: 77.4%
Why has Bogle changed the investing world?
- Creating the index fund
- Teaching basic and important rules to investors
An Index fund is a mutual fund or exchange-traded fund (ETF) with a portfolio constructed to match or track the components of a market index (such as the S&P 500). Historically the index funds/ETF has been successful in outperforming most actively managed mutual funds.
An index mutual fund is said to provide broad market exposure, low operating expenses and low portfolio turnover.
8 Rules of Investing by Bogle
Bogle argues for an approach to investing defined by simplicity and common sense.
Here are his eight basic rules for investors:
- Select low-cost funds
- Consider carefully the added costs of advice
- Do not overrate past fund performance
- Use past performance to determine consistency and risk
- Beware of stars (as in, star mutual fund managers)
- Beware of asset size
- Don’t own too many funds
- Buy your fund/portfolio and hold it