The Vanguard Group’s founder John C. Bogle, who stands tall among his peers for his bold financial innovations and dogged fight for low cost investment options, has written a new book that is full of humor and wisdom about his long, eventful career and his rewarding personal life.
In Stay the Course: The Story of Vanguard and the Index Revolution, Bogle, 89, chronicles his path from a 1951 magna cum laude graduate of Princeton University to CEO and chairman of the board (retired) of Vanguard Group, the world’s largest provider of mutual funds and the second largest provider of ETFs.
Vanguard, with more than $5 trillion in assets under management on behalf of 20 million clients, reflects Bogle’s singularly democratic and thrifty personality: its headquarters is in a Pennsylvania suburb a bit south of the Valley Forge historic site where annual company picnics are held, and on the company campus, there are no reserved parking spaces, for anyone, and no executive dining room. All Vanguard workers are called “crew,’’ not employees.
To avoid misunderstandings and resentment among investors unable to find help, Bogle had every member of the Vanguard crew trained in handling investor telephone calls; it came in handy on Black Monday, Oct. 19, 1987:
“I loved answering the phones. I took 104 phone calls and periodically wandered through the ranks offering appreciation and optimism,’’ he wrote.
At Vanguard, Bogle pushed for and prevailed in establishing the first index fund available to individual investors, and he was the dauntless champion of low expense ratios. His friend and fellow devotee of the miracle of compound interest and economies of scale, Warren Buffett, has endorsed Vanguard’s index fund in Berkshire Hathaway’s annual reports; in the 2016 report, Buffett wrote:
“For decades, Jack has urged investors to invest in ultra-low-cost index funds. In his crusade, Jack was frequently mocked by the investment management industry. Today, however, he has the satisfaction of knowing that he helped millions of investors realize far better returns on their savings than they otherwise would have earned. He is a hero to them and to me.’’
Bogle’s book will be a treat for the statistically curious: charts on assets, annual returns and rates of growth; advisory fee rates, expense ratios, cash flows, market appreciations and more are generously sprinkled throughout Bogle’s book.
As are the chief landmarks celebrated by Vanguard, as recounted by Bogle, from creating “the upstart’’ Vanguard in 1974 to his retirement in 1996. He is now president of Bogle Financial Markets Research Center.
Vanguard, under Bogle, can claim significant financial instrument “firsts’’: the first company to offer tax-exempt bond funds (and later, taxable bonds) with three distinct maturities; the first to create a total bond market index fund and balanced index fund, holding total bonds and total equities. Vanguard also initiated the method of factor investing by bringing to market the first “value’’ fund.