Vanguard founder Jack Bogle was against index funds before he was for them. It is a good thing for him and Vanguard shareholders that he had a change of heart (before he had his change of heart). A Santa Clara University professor has fingered Bogle as the fund industry executive who penned the case against index funds in a rebuttal to a 1960 Financial Analysts Journal article.
The Wall Street Journal
today recounts the case in which Bogle wrote the article responding to Meir Statman's call for the first mutual fund under a pseudonym of "John B. Armstrong". In the article he pointed out that a number of actively managed funds had turned in strong performance, showing that "common-stock mutual funds can successfully meet the test of 'outperforming the averages'."
It turns out that Bogle is better at running a fund firm than he is at covering his tracks. He had already used the Armstrong pen name once while at Princeton University. That Princeton thesis ("Economic Role of the Investment Company" later appeared in one of his four books. Oh yes, Armstrong was also the name of Bogle's great-grandfather, making the case relatively easy to make.
Bogle confirmed to the paper that he did indeed pen the article and that he used the pen name at the suggestion of his bosses at Wellington.
He also cited a quote from Maynard Keynes: "When the facts change, I change my mind. What do you do, sir?"
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