A Giant of the Investing Industry

Last Wednesday, January 19, John Bogle died at 89 in his home in Bryn Mawr, Pennsylvania. All of us who use a passive investment strategy should take a moment to give thanks for his work.

So who was this man, and what did he do?

John Bogle created the first index fund in 1976. That was two years after he founded the Vanguard Company.

Bogle promoted an idea radically different from that of the actively managed mutual funds of the day, which tried to “beat” the market. They charged clients for their expertise, but the promised gains didn’t always materialize, particularly over the long term.

Instead of trying to beat the market, Bogle proposed an index fund that would match it. Over the long run, he believed it would achieve higher returns for investors than an actively managed mutual fund, in part because of lower fees. He was right.

How big a deal was Bogle’s concept? Nobel economics laureate Paul Samuelson, a leader of the efficient market hypothesis, ranked Bogle’s creation of the index fund right up there with the invention of the wheel, the alphabet, the Gutenberg printing press, and wine and cheese.

Bogle’s idea of cost-effective passive investments is a key component of our investment philosophy at Conlon Dart. The money we save by using passive investments—whether through Vanguard funds or through the many similar funds that sprang up after Bogle’s invention—adds up enough over the long haul to fuel all of our financial goals.

This New York Times obituary will tell you more about John Bogle and the creation of the index fund. Without a doubt, Bogle had a material impact on many of our lives.