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Jack Bogle on the Rise of Index Investing: 'I Do Feel Vindicated'
When you’re right, you’re right. And perhaps like never before, Jack Bogle has been proven right.
The the pioneer of index investing was recently interviewed by New York magazine to talk about the current investment landscape, specifically the tidal wave of investor money leaving actively-managed funds for index funds. Bogle was asked whether he felt vindicated all these years later – he launched what was then called the First Investment Trust (and eventually the Vanguard Index 500) in 1974 – after having been mocked in the early days by Wall Street for his evangelism about index investing.
“Vindicated is a funny word, but that’s probably good enough,” Bogle tells New York. “I do feel vindicated.”
And he should feel vindicated: As New York points out, Vanguard brought in $250.6 billion in assets in the 10 months ending in October, with about $204.5 billion of it in index funds. A large portion of that money, New York notes, is coming from competitors’ actively managed funds.
Today there’s no disputing that Jack Bogle has always been on the money, and we can see that conclusion in the marketplace. Like an outgoing tide, money has been flowing from actively managed funds into passively managed mutual funds and exchange-traded funds. Investors sluiced more than $300 billion out of active funds for passive funds in the last few years. Passive funds now account for $5 trillion of investors’ money. Vanguard itself has $2.3 trillion in assets invested in index funds.
“I probably sound like I’m self-satisfied and complacent, but I’m not,” Bogle tells New York. “I think everybody wants to create something new. As you get older, you want to create something that helps people.”
There’s a lot of great stuff to chew on in this article, including a look back at Bogle’s early struggles to gain relevancy during the market boom of the 1980s, when stock pickers were riding high and his adherence to index investing was derided as “Bogle’s Folly” by those on the Street. Now 87 years old, Bogle is getting the last laugh.
You can read the whole article here.
Screenshot via YouTube