John C. Bogle, the father of the retail index fund and an outspoken champion for low-cost investing that won him heroic status among individual investors, died Wednesday. He was 89. Bogle founded the Vanguard Group, the mutual fund behemoth known for inexpensive mutual funds that track a market index rather than trying to beat it. Vanguard is now a giant of the asset-management industry that has shifted toward the passive style of investing and saved trillions of dollars for investors in the process. “Jack Bogle made an impact on not only the entire investment industry, but more importantly, on the lives of countless individuals saving for their futures or their children’s futures,” Vanguard Chief Executive Tim Buckley said in a news release Wednesday afternoon that confirmed Bogle’s death. “He was a tremendously intelligent, driven and talented visionary whose ideas completely changed the way we invest. We are honored to continue his legacy of giving every investor ‘a fair shake.’” Bogle formed Vanguard in 1974 and it began operations the next year. As of Sept. 30, 2018, it had about $5.3 trillion in global funds under management, according to the company. When Bogle first launched a fund tracking the S&P 500 index SPX, +0.19% at a low cost to investors in 1976, he called it “the Vanguard experiment,” but it was widely derided as “Bogle’s folly.” Known then as the First Index Investment Trust, its initial underwriting collected just $11 million; it is now known as the Vanguard 500 Index Fund VFINX, +0.19% , and has $441 billion in assets, Vanguard noted Wednesday. “Don’t look for the needle in the haystack. Just buy the haystack,” Bogle famously said of the passive-investing approach. See also: The genius of John Bogle in 9 quotes Beyond convincing the investment community that index funds were worthwhile, Bogle also pushed Vanguard to offer the funds directly to consumers, avoiding brokers. Vanguard said Wednesday that the approach has saved shareholders hundreds of millions of dollars in sales commissions. Vanguard says its average expense ratio is 0.11%. Bogle remained at the helm of Vanguard until stepping down in 1996. He stayed in the public eye, however, making speeches and commenting on the markets. In 1999, Bogle created the Bogle Financial Markets Resource Center, which he ran as president until his death. “Presumably you are accumulating money now and putting money away for the future. Do not, under any circumstances, stop doing that. That is the first rule. Don’t stop investing,” Bogle told MarketWatch in 2017, when asked for general rules for investing. “The second rule is, particularly for the younger people in the world: A good solid market decline is a blessing. You’ll be buying — if you invest each month — stocks at lower and lower prices. Don’t be antagonized by that; use that as an opportunity of a lifetime.” Bogle is survived by his wife, whom he married in 1956, as well as six children, 12 grandchildren and six great-grandchildren, according to Vanguard. His death was first reported by Philly.com.<doc-sep>American investors have lost the fiercest advocate they may have ever had. John Clifton Bogle, founder of Vanguard Group and a crusader for investors’ rights for more than three decades, died in Bryn Mawr, Pa., on Wednesday at age 89. The cause of death was cancer, said Mr. Bogle’s assistant, Michael Nolan. “If all investors had heeded his ideas, they would be hundreds of billions of dollars better off than they are now,” financier Warren Buffett told The Wall Street Journal in 2009. Through the sheer force of his will, Mr. Bogle, known as Jack, almost singlehandedly made index funds—which hold virtually every security in a given market—a practical and popular option for institutional and individual investors alike. He created the first mutual fund tied to an index in 1975. “Jack Bogle made an impact on not only the entire investment industry, but more importantly, on the lives of countless individuals saving for their futures or their children’s futures,” Vanguard Chief Executive Tim Buckley said in a statement. Under Mr. Bogle, who retired as Vanguard’s chief executive in 1996, Vanguard continually cut the costs of investing, eventually stoking a fee war that roiled an entire industry and created a money-management giant in the Philadelphia suburb of Malvern. Vanguard is now the second-largest asset manager in the world, with $4.9 trillion in assets under management at the end of 2018. His campaign to cut fees put Mr. Bogle squarely into an American tradition of iconoclastic discounters like Henry Ford of Ford Motor, Sam Walton of Walmart and Michael Dell of Dell Inc.—men who built giant companies by selling directly to the consumer at rock-bottom prices. By putting the ability to own a stake in the entire stock market into the hands of any investor who could scrape together what was for many years Vanguard’s required account minimum of $3,000, Mr. Bogle helped democratize financial markets. Holders of index funds can match the market for a fraction of the cost of traditional funds. The resulting savings—billions of dollars a year—have gone straight into investors’ own pockets. Vanguard’s asset-weighted average fee has fallen in the past 20 years to 0.10% from 0.27%, according to Morningstar Inc. Many traditional funds still demand 1% or more. Mr. Bogle was alone among mutual-fund leaders in having his own groupies—a following of investors who are dedicated to his principles of low-cost, long-term investing. Members of an official group of these fans call themselves “Bogleheads.” In a speech in 2005, Nobel Prize-winning economist Paul Samuelson praised Mr. Bogle’s creation of the retail index fund as equal in importance to “the invention of the wheel, wine and cheese, the alphabet and Gutenberg printing.” Mr. Bogle’s championing of index funds may also have had unintended negative consequences. By enabling anyone to own a broad swath of the market at minimal cost, some critics say index portfolios—especially in the form of exchange-traded funds—may have encouraged excessive trading, higher volatility and a lower sensitivity to the risk of overvaluation. ETFs trade like stocks on exchanges. Born in Montclair, N.J., on May 8, 1929, Mr. Bogle and his twin brother David arrived five months before the Great Crash that began that October wiped out much of their family’s wealth. Mr. Bogle delivered papers and worked as a waiter growing up. At Blair Academy and Princeton University, Mr. Bogle said he initially struggled with the subject of economics. An article about the mutual-fund industry in the December 1949 issue of Fortune magazine inspired his 1951 senior thesis, titled “The Economic Role of the Investment Company.” He graduated from Princeton magna cum laude in economics. Screens display a tribute to Jack Bogle on the floor of the New York Stock Exchange on Jan., 17, 2019. Photo: brendan mcdermid/Reuters Mr. Bogle’s first job in the investment world was as a clerk to Walter L. Morgan, who founded the first-ever balanced mutual fund at Wellington Management. Despite his eventual advocacy for index funds, Mr. Bogle was contemptuous early in his career of the idea that trying to beat the market was a waste of money. In 1960, under the pen name John B. Armstrong, he wrote a lengthy article for the Financial Analysts Journal in which he ridiculed the very idea “that the mutual fund itself should buy the market average,” or settle for a return no better than that of a benchmark like the Dow Jones Industrial Average or the S&P 500 index. In 1973, he gave a speech insisting that “the average individual is getting ‘above-index’ results in mutual funds” and that “neither compensation of salesmen, nor profitability of broker-dealers and underwriters, is excessive.” Only after he was fired as Wellington’s president in 1974 by his partners and launched Vanguard as an independent company the following year did Mr. Bogle challenge the industry’s prevailing orthodoxy that price was a signal of quality and embrace low-cost investing. Mr. Bogle chose to organize Vanguard as a mutual company, an idea he said he had unsuccessfully pitched to his Wellington colleagues years earlier. Along the lines of a consumer cooperative, the firm would be—and still is—owned not by private shareholders who seek to maximize their own profits but rather by its fund investors, who earn higher returns as Vanguard drives costs lower. In 1977, Vanguard also went “no-load,” eliminating the sales commissions and all middlemen on its funds. Mr. Bogle’s insistence on integrity, which often struck many of his competitors as sanctimonious, steered Vanguard clear of the scandals that periodically swept through the mutual-fund industry. Still, when it came to corporate governance, Mr. Bogle became a greater proponent of index and other funds harnessing their power on shareholder votes after his tenure at Vanguard than he was during it. At Vanguard, Mr. Bogle paid himself well but not lavishly, though he and other firm executives have never publicly disclosed those figures. Mr. Bogle frowned on ostentation, driving a Volvo station wagon, vacationing in Lake Placid, N.Y., flying economy class and haggling for discounts at hotels. Vanguard continues to take a similarly thrifty approach to its business at its Malvern campus, whose plain brick buildings bear the names of warships. Mr. Bogle, a fan of British Adm. Horatio Nelson, named the firm Vanguard after Adm. Nelson’s ship in the 1798 Battle of the Nile and referred to employees as “crew.” Despite Mr. Bogle’s age and lengthy career, he had chronic coronary failure and suffered at least seven heart attacks—the first at age 31. He endured a malfunctioning pacemaker before finally receiving a heart transplant in 1996. “I didn’t think about [dying],” he told an interviewer in 2007. “I just got on with what needed to be done.” Write to Jason Zweig at intelligentinvestor@wsj.com and Sarah Krouse at sarah.krouse@wsj.com<doc-sep>(Reuters) - John Bogle, whose family’s struggles during the Great Depression led him to pioneer low-cost investing and to found Vanguard Group, now the world’s biggest mutual fund firm, died on Wednesday at the age of 89, Vanguard said. Bogle had been in frail health for years, surviving at least six heart attacks and receiving a heart transplant in 1996. The cause of death was cancer, according to Bogle’s assistant Michael Nolan. Despite ill health, Bogle was a vital presence through his later years as he pressed for reforms in corporate governance and fund administration. He often mixed sharp rhetoric with a wry sense of humor and established a reputation as a curmudgeon in his industry, at times at odds with Vanguard executives who eventually stripped him of much of his power within the organization. Still Bogle, known widely as Jack, kept deep professional friendships and maintained a loyal following through his books and public speaking appearances. Some termed themselves “Bogleheads” in his honor and spread online his messages of thrift and investments in low-fee funds. “Jack did more for American investors as a whole than any individual I’ve known,” billionaire Warren Buffett said in a statement. At the 2017 annual meeting of his company Berkshire Hathaway Inc BRKa.N, which Bogle attended, Buffett estimated that by making low-cost index funds so popular for investors, Bogle "put tens and tens and tens of billions of dollars into their pockets." Slideshow ( 5 images ) Bogle’s life in many ways was the opposite of his great fund industry rival, Edward “Ned” Johnson III, who inherited control of Fidelity Investments in Boston from his father and employed star active managers like Peter Lynch. Vanguard, in contrast, promoted low-cost index funds, products that Fidelity and the rest of the industry came to emulate. “He made himself a centurion to the individual investor,” said Charles Ellis, an industry consultant and a former Vanguard funds director. “He had one great message, about lowering fees, and he kept hammering away at it.” MODEST BEGINNINGS Bogle was born on May 8, 1929, to a family of modest means in Montclair, New Jersey, and graduated from Princeton University in 1951, working his way through college as a waiter. His economics thesis there earned him a job from an older Princeton alumnus at the Wellington Management Co in Philadelphia. Bogle rose through the ranks and persuaded the company to start offering more mutual funds, even as he suffered his first heart attack at the age of 31, in 1960. He had a pacemaker installed in 1967 to treat a condition known as heart arrhythmia. Slideshow ( 5 images ) He created Vanguard in 1974 after a dispute with others at Wellington, and built its products around a new economic model in which the funds would be run by their own directors and staff rather than by an external management company. In 1976, Vanguard also introduced the first indexed fund for individual investors. According to the company, it was initially ridiculed as "un-American" but now the Vanguard 500 Index Fund VOO.P is one of the industry's largest. Vanguard has some $5 trillion in assets under management, the bulk of it in index funds and exchange-traded funds. Dan Wiener, who runs a newsletter for Vanguard investors, recounted how Bogle once sued him after he disclosed details of Bogle’s compensation, and said Bogle could have a thin skin about material that did not “paint Vanguard as a virtuous non-profit.” But Wiener said that when he sent a note wishing Bogle well after a 1996 heart transplant, Bogle responded “in the guise of one of his doctors, who noted that my email had raised his heart rate and that I should refrain from further emails until he was recovered. When I later found out we had a good laugh, at my expense.” Even as Bogle’s health declined in his later years he remained a combative public presence, arguing that larger fund companies had grown too focused on their own profit rather than serving as stewards of their clients’ interests, including pressing corporations for better governance. “The mutual fund industry lost its way because of the triumph of managers’ capitalism over owners’ capitalism,” Bogle wrote in a typically fiery passage in his 2005 book “The Battle for the Soul of Capitalism.”<doc-sep>
EMBED >More News Videos John C. Bogle is presented the Community College of Philadelphia Foundation's highest honor, the Allen T. Bonnell Award in December of 2008. VALLEY FORGE, Pa. (WPVI) -- John C. Bogle, who simplified investing for the masses by launching the first index mutual fund and founded Vanguard Group, died Wednesday in Bryn Mawr, Montgomery County, the company said. He was 89.Bogle did not invent the index fund, but he expanded access to no-frills, low-cost investing in 1976 when Vanguard introduced the first index fund for individual investors, rather than institutional clients.The emergence of funds that passively tracked market indexes, like the Standard & Poor's 500, enabled investors to avoid the higher fees charged by professional fund managers who frequently fail to beat the market. More often than not, the higher operating expenses that fund managers pass on to their shareholders cancel out any edge they may achieve through expert stock-picking.Bogle and Vanguard shook up the industry further in 1977. The company ended its reliance on outside brokers and instead began directly marketing its funds to investors without charging upfront fees known as sales loads.Bogle served as Vanguard's chairman and CEO from its 1974 founding until 1996.He stepped down as senior chairman in 2000, but remained a critic of the fund industry and Wall Street, writing books, delivering speeches and running the Bogle Financial Markets Research Center.The advent of index funds accelerated a long-term decline in fund fees and fostered greater competition in the industry. Investors paid 40 percent less in fees for each dollar invested in stock mutual funds during 2017 than they did at the start of the millennium, for example. But Bogle continued to maintain that many funds were overcharging investors, and once called the industry "the poster-boy for one of the most baneful chapters in the modern history of capitalism. "Bogle also believed that the corporate structure of most fund companies poses an inherent conflict of interest, because a public fund company could put the interests of investors in its stock ahead of those owning shares of its mutual funds. Vanguard has a unique corporate structure in which its mutual funds and fund shareholders are the corporation's "owners." Profits are plowed back into the company's operations, and used to reduce fees. "A lot of Wall Street is devoted to charging a lot for nothing," billionaire investor Warren Buffett told CNBC. "He charged nothing to accomplish a huge amount. "Vanguard, based in Malvern, manages $5 trillion globally. It helped usher in a new era of investing, and index funds have increasingly become the default choice for investors. In 2017, investors plugged $691.6 billion into index funds while pulling $7 billion out of actively managed funds, according to Morningstar.Vanguard offers both index and managed funds, but remains best-known for its index offerings. Vanguard's original index fund, now known as the Vanguard 500 Index, is no longer the company's biggest, but remains among the company's lowest-cost funds.Bogle spent the first part of his career at Wellington Management Co., a mutual fund company, then based in Philadelphia. He rose through the ranks and, in his mid-30s, was tapped to run Wellington.He engineered a merger with a boutique firm that was making huge sums, but was ousted after the stock market tanked in the early 1970s, wiping out millions in Wellington's assets. He said he learned an important lesson in how little money managers really know about predicting the market.Bogle suffered several heart attacks and underwent a heart transplant in 1996, the year he stepped down as CEO. He reached the mandatory retirement age of 70 for Vanguard directors in 1999 and left as senior chairman the next year.Vanguard did not provide a cause of death. Philly.com is reporting he died of cancer, citing Bogle's family. "Jack Bogle had unwavering passion for America, our capital markets, and most of all our Main Street investors," said Securities and Exchange Commission Chairman Jay Clayton.John Clifton Bogle was born in May 1929 in Montclair, New Jersey, to a well-off family; his grandfather founded a brick company and was co-founder of the American Can Co. in which his father worked.Bogle attended Manasquan High School in Manasquan, N.J, for a time, then got a scholarship to the prestigious all-boys Blair Academy in Blairstown, New Jersey. It was at Blair that Bogle discovered his knack for math. He graduated from Blair in 1947 and was voted most likely to succeed.Bogle graduated from Princeton with a degree in economics in 1951.