Van­guard founder opened in­vest­ing tools to re­tail in­vestors

The Charlotte Observer (Sunday) - - Obituaries - As­so­ci­ated Press

John C. Bogle, who sim­pli­fied in­vest­ing for the masses by launch­ing the first in­dex mu­tual fund and founded Van­guard Group, died Wed­nes­day, the com­pany said. He was 89.

Bogle did not in­vent the in­dex fund, but he ex­panded ac­cess to no-frills, low-cost in­vest­ing in 1976 when Van­guard in­tro­duced the first in­dex fund for in­di­vid­ual in­vestors, rather than in­sti­tu­tional clients.

The emer­gence of funds that pas­sively tracked mar­ket in­dexes, like the Stan­dard & Poor’s 500, en­abled in­vestors to avoid the higher fees charged by pro­fes­sional fund man­agers who fre­quently fail to beat the mar­ket. More often than not, the higher oper­at­ing ex­penses that fund man­agers pass on to their share­hold­ers can­cel out any edge they may achieve through ex­pert stock-pick­ing.

Bogle and Van­guard shook up the in­dus­try fur­ther in 1977. The com­pany ended its re­liance on out­side bro­kers and in­stead be­gan di­rectly mar­ket­ing its funds to in­vestors without charg­ing up­front fees known as sales loads.

Bogle served as Van­guard’s chair­man and CEO from its 1974 found­ing un­til 1996.

He stepped down as se­nior chair­man in 2000, but re­mained a critic of the fund in­dus­try and Wall Street, writ­ing books, de­liv­er­ing speeches and run­ning the Bogle Fi­nan­cial Mar­kets Re­search Cen­ter.

The ad­vent of in­dex funds ac­cel­er­ated a longterm de­cline in fund fees and fos­tered greater com­pe­ti­tion in the in­dus­try. In­vestors paid 40 per­cent less in fees for each dol­lar in­vested in stock mu­tual funds dur­ing 2017 than they did at the start of the mil­len­nium, for ex­am­ple.

Bogle also be­lieved that the cor­po­rate struc­ture of most fund com­pa­nies poses an in­her­ent con­flict of in­ter­est, be­cause a pub­lic fund com­pany could put the in­ter­ests of in­vestors in its stock ahead of those own­ing shares of its mu­tual funds. Van­guard has a unique cor­po­rate struc­ture in which its mu­tual funds and fund share­hold­ers are the cor­po­ra­tion’s “own­ers.”

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