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Legends

Jack Bogle

Vanguard and the first index fund, 1975–1996

A legend for a different reason: he didn’t pick shares, he made owning the whole market cheap enough for almost anyone

Historical: what he built and what it did for investors. An index fund owns the whole market, so there are no picks to list.

Jack Bogle founded Vanguard in 1975 and in 1976 launched the first index fund that ordinary people could buy, one that simply owned the shares in the S&P 500 at a very low cost. It was mocked as “Bogle’s folly” and raised a fraction of what he hoped, but index funds now hold trillions of dollars and have pushed fees down across the whole industry. He set Vanguard up to be owned by its own funds, and so by the people invested in them, so that savings were passed on as lower fees.

Record

  • The First Index Investment Trust (now the Vanguard 500 Index Fund) launched in 1976. Bogle hoped to raise $50 million to $150 million; it raised a little over $11 million, which he called “an abject failure”. (Vanguard, 50 years, 50 facts)
  • Its yearly running cost was 0.43% at launch. Today it is 0.04% for the Admiral shares and 0.03% for the ETF (VOO). At the end of 2024 the industry average was 0.11% for index funds and 0.59% for actively managed funds. (Vanguard, 50 years, 50 facts)
  • Warren Buffett, 2016 letter to Berkshire shareholders: “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.” (Berkshire Hathaway 2016 letter)
  • Buffett bet $1 million that an S&P 500 index fund would beat a selection of hedge funds over the ten years 2008–2017. The index fund (Vanguard’s) returned 7.1% a year; the five funds of funds chosen against it averaged 2.2%. (Berkshire Hathaway 2017 letter)

About Jack Bogle

Born in 1929 in Montclair, New Jersey. Founded Vanguard in 1975, owned by its funds and so by their investors, and launched the first index fund for ordinary investors in 1976. Ran Vanguard until 1996. Died in January 2019, aged 89.

  • Born 8 May 1929 in Montclair, New Jersey. His Princeton thesis in 1951 was about mutual funds. (en.wikipedia.org)
  • Joined Wellington Management after university and became its head, then was fired in 1974 after a merger went wrong. He founded Vanguard in 1975. (en.wikipedia.org)
  • Ran Vanguard until 1996 and died on 16 January 2019, aged 89. (washingtontimes.com)

Sources: en.wikipedia.org, corporate.vanguard.com

What a difference in fees adds up to: the fee calculator.

Bogle’s index fund owned every company in the S&P 500 in proportion to its size, so there is no list of picks to show. Its lesson is about cost: see what fees do to a pot in the fee calculator.

Past returns don’t predict future ones. Nothing here is investment advice.