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Wednesday, January 16, 2019

Jack Bogle Dies

Reported by Neil Anderson, Managing Editor

Jack Bogle, the founder of Vanguard [profile] and the father of the index mutual fund business, died at home in Bryn Mawr, Pennsylvania today at the age of 89.

Vanguard CEO Tim Buckley confirmed the news this afternoon after the market closed. The Philadelphia Inquirer reports that Bogle died of cancer.

John Clifton Bogle, known by his "Boglehead" fans as "Saint Jack," may have been the most famous mutual fund industry voice in history. His constant advocacy for low fees and for passive investing gained him a strong following (though it frequently pitted him against many of his fellows in the asset management industry).

Born May 8, 1929 in Montclair, New Jersey, Bogle later attended Princeton, where he wrote a senior thesis on mutual funds. After graduating, Bogle was hired by fellow Princeton alumnus Walter Morgan at Philadelphia-based Wellington Management Company in 1955. Bogle rose through the Wellington ranks, spearheading the firm's expansion in the mutual fund industry. He became president of the firm in 1967 and led its merger that year with Boston-based Thorndike, Doran, Paine & Lewis.

Yet the go-go stock market of the 1960s gave way to a big market plunge in 1974, Wellington's funds suffered, and Bogle was fired. Yet he set up a new company, Vanguard Group (named after British Lord Nelson's flagship at the Battle of the Nile in 1798), to administer Wellington's funds, and launched that company on May 1, 1975. In 1976, Vanguard launched the first index mutual fund. The great Vanguard experiment had begun.

Yet Bogle was not just the father of the index mutual fund business (that now dominates mutual fund industry flows). He also structured Vanguard in an unconventional way, taking a cue from the insurance industry: he made it a mutually-owned company, an asset manager owned by the shareholders of its mutual funds, not by employees or a larger company or a family or small group of private investors. Bogle ingrained the low-cost mantra in Vanguard's corporate soul.

In 1977, Vanguard also went no-load, and to this day the firm continues to eschew platform fees, 12b-1s, and other distribution fees.

Bogle stepped down as Vanguard CEO in 1996 and underwent heart transplant surgery. He left Vanguard's board of directors in 1999 and created the Vanguard-supported Bogle Financial Markets Resource Center. In the remaining 20 years of his life, as passive funds gained market share and Vanguard rose to become the largest mutual fund company in the world (by AUM), he continued to make speeches, talk to the press, and reach out directly to the masses via his blog, editorials, and more. According to Vanguard, Bogle's 12 books have sold more than 1.1 million copies worldwide.

"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," Buckley states.

In 2010, Bogle spoke to his fellow fundsters at the MFWire/Fuse Influencers Summit after receiving the "Fuse Lifetime Impact Award" in recognition of his achievements. The famous fundster reflected on the mutual fund industry's then-76-year history and on "Vanguard's coronation" as the biggest fund firm.

"Uneasy lies the head that wears the crown," Bogle said. "So let's all get together 25 years from now in 2035 — heck, maybe I should be more realistic and say (optimistically!) 2015 — and see who is wearing the crown of leadership."

In the end, he made it a few years past his optimistic guess. 

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