Born in 1929, John Bogle was a pioneer in the world of investing. Bogle attended Princeton University and completed his senior thesis on mutual funds, which laid the groundwork for his extensive career and the creation of the first index fund.
Bogle’s Legacy
After graduating from Princeton, Bogle was hired at Wellington Fund and moved up in management over the course of several years. Bogle founded The Vanguard Group in 1975, which led to the creation of the First Index Investment Trust (eventually to become the Vanguard 500 Index Fund)一the first index mutual fund open to the public. This was not initially well-received, as some thought of the First Index Investment Trust as “un-American”, but it is now a major leader in low-cost investing.
John Bogle was also a published author, putting out educational works that brought investment knowledge to the public such as Common Sense on Mutual Funds: New Imperatives for the Intelligent Investor, and The Little Book of Common Sense Investing: The Only Way to Guarantee Your Fair Share of Stock Market Returns. He was also known for his critiques of Wall Street and the American financial system and shared his perspective in the book The Battle for the Soul of Capitalism.
John Bogle recently passed away in 2019 at the age of 89.
The Goal of Vanguard
According to Vanguard itself, it “was founded on a simple but revolutionary idea一that a mutual fund company should not have outside owners.” This allows the focus to be on the investors themselves and supports the low-cost, long-term performance model of Vanguard funds. Bogle intended for this investment strategy to allow investors to achieve higher returns with lower costs than one might face with traditional actively managed funds.
Index Investing Explained
Created by John Bogle, index investing “allows investors to buy mutual funds that track the broader market,” as stated by Investopedia. The index fund model makes low-cost investing easier and acts as an alternative to the short-term and risky investment strategies that were popular in the financial markets of Bogle’s time.
The founding of the Vanguard Group in the 1970s challenged the norm and brought a new perspective to the forefront: investors can get better results from holding the broad stock market rather than picking stocks and making risky investment decisions. This kind of passive investing was not popular when it was introduced to the investment world by Bogle, but it soon cemented its place in the industry and is known to lead to above-average returns.
Index funds are intended to perform well over a long period of time as opposed to providing short-term returns, making it a ‘superior’ method of investing in the minds of many. Alpha Wealth Funds offers separately managed accounts using our four model portfolios composed of the low-cost index and ETF funds that we carefully select each quarter for their timeliness and opportunity to create alpha.