Legends of Investing

John Bogle

November 16, 2012

Investment Legend, John Bogle Shares the Investment Lessons of a Lifetime.

An interview with one of the investment greats! John C. Bogle, Vanguard founder, index fund creator, and tireless advocate for the little guy discusses how investors can succeed despite Wall Street’s problems.

WEALTHTRACK Episode #921; Originally Broadcast on November 16, 2012

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John Bogle

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Newsletter

Consuelo MackWe have a special treat for you this week- an extended interview with one of a kind investment legend, John Bogle. Jack, as he is known to many of us, is the founder of Vanguard, the low cost investment giant famous for the index funds which he created there in 1976. His first index mutual fund, now named the Vanguard 500 Index Fund because it is modeled on the S&P 500 market index, now has over $100 billion in assets, as does its equivalent fund for institutional investors. If combined, they would be the world’s largest stock mutual fund. Vanguard itself is now managing around $2 trillion in assets, making it the largest mutual fund company in the world. And it’s growing rapidly because of its low cost, largely passive investment model.

Called a mutual company, Vanguard is the only mutual fund company owned by its fund investors, not private or public stockholders. Bogle set it up that way as he puts it to insure it would act as a pure “fiduciary”, putting the interests of its investors first. One measure of that goal is costs. According to Vanguard, the average expense ratio for its stock funds is 0.2% of the assets under management, or 20 basis points -100 basis points equals one percent- that compares to the industry average of .79%, or 79 basis points, nearly three times more. Fees at actively managed funds are usually considerably higher than that.

Investors are taking note. The well-publicized withdrawal from more expensive actively managed funds into index funds has accelerated over the last two decades and exploded in the last couple of years. From $26 billion in 1993, traditional index funds now have over one trillion in assets. Their much younger and incredibly popular offspring, exchange traded funds, which are index funds traded like stocks, have exploded from $464 million at their launch in 1993 to well over a trillion, surpassing their older mutual fund brethren. In total, index funds now make up 28% of total stock fund assets and counting.

From the very beginning of his career, Jack Bogle has been a tireless advocate for individual investors and an outspoken critic of much of the money management industry. It’s the focus of his tenth, and he says last, book titled The Clash of the Cultures: Investment Vs. Speculation. I’ll begin the interview by asking Jack about the changes that have occurred in the industry during his 60 plus year career and what it was like when he started in the business in 1951, at the actively managed and still thriving Wellington Fund.

On this week’s WEALTHTRACK Extra, we’ll also feature our full, unedited interview with Jack Bogle- you won’t want to miss his timeless words of wisdom! As always, if you can’t join us at the appointed hour on your local public television station, you can watch the show on our website as a podcast or streaming video. You can also find the One Investment picks of our guests and my Action Points there. For those of you who would like to see our program 48 hours in advance of the broadcast, you can subscribe to our WEALTHTRACK PREMIUM subscription service on the website.

Have a great weekend and have the happiest of Thanksgivings with your loved ones. Make the week ahead a profitable and a productive one!

Best regards,

Consuelo
Mathews Asia

Action Point

Read This:

One Investment

“Total stock, total U.S. stock market index fund. Period.”

Morningstar recommends:
Vanguard Total Stock Market ETF (VTI)

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iShares Russell 3000 (IVW)

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