“He stood up and said what he believed was right, and it cost him friendships in the fund industry,” Don Phillips, managing director at Morningstar, said in an interview.
At a conference hosted by Morningstar in May 2009, Bogle criticized asset managers for paying themselves too much. “Compensation is totally, ridiculously out of control,” he said. “Money managers should return to stewardship and trusteeship.”
Billionaire investor Warren Buffett praised Bogle in his annual letter to Berkshire Hathaway Inc. shareholders in early 2017.
“If a statue is ever erected to honor the person who has done the most for American investors, the hands down choice should be Jack Bogle,” Buffett wrote. “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.”
Getting Started
Bogle began his career in 1951 after graduating magna cum laude in economics from Princeton University. His senior thesis on mutual funds had caught the eye of fellow Princeton alumnus Walter L. Morgan, who had founded Wellington Fund, the nation’s oldest balanced fund, in 1929 and was one of the deans of the mutual fund industry. Morgan hired the ambitious 22-year-old for his Philadelphia-based investment management firm, Wellington Management Company.
Bogle ended up becoming the driving force behind Wellington’s growth into a mutual fund family after he persuaded Morgan, in the late 1950s, to start an equity fund that would complement Wellington Fund. Windsor Fund, a value-oriented equity fund, debuted in 1958.
In 1967, Bogle led the merger of Wellington Management Company with the Boston investment firm Thorndike, Doran, Paine & Lewis (TDPL). Seven years later, a management dispute with the principals of TDPL led Bogle to form Vanguard in September 1974 to handle the administrative functions of Wellington’s funds, while TDPL/Wellington Management would retain the investment management and distribution duties. The Vanguard Group of Investment Companies commenced operations on May 1, 1975.
A student of British naval history, Bogle continued Wellington’s Napoleonic-Wars theme by naming the newly independent group of funds “Vanguard,” after the flagship of Admiral Horatio Nelson’s fleet in the Battle of the Nile in 1798. Bogle’s office was stuffed with decorations, from pillows and paintings to ship models and statuettes, that commemorated Nelson and his fleet.
In 1977, the fund’s board took control of sales of the funds from Wellington, which had distributed them through brokers. Vanguard funds were then sold directly to customers as no-load shares, meaning investors bought them without paying broker commissions.