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The Bogle Effect
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The Bogle Effect

How John Bogle and Vanguard Turned Wall Street Inside Out and Saved Investors Trillions

Eric Balchunas
Matt Holt Books, 2022
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Editorial Rating

8

Qualities

  • Background
  • Engaging

Recommendation

There’s a good chance you’ve got a low-fee index fund in your retirement account or investment portfolio. Decades after the late Jack Bogle pioneered and championed these passively managed funds, they have become the hottest thing in the investing world. When Bogle first pitched the concept, markets saw him as a quaint idealist. But by the time he died, the funds had grown so large that he was uncomfortable with their rollicking success. Market analyst Eric Balchunas, a clear fan of Bogle, lays out the evolution of index funds in this accessible, insightful study.

Summary

Vanguard is an industry behemoth that manages more than $8 trillion on behalf of 30 million investors.

The late John “Jack” Bogle was the unlikeliest of Wall Street stars. He became famous by creating a company that aimed not to make its founder rich but to offer everyday investors a good deal. His company, Vanguard, grew rapidly because it embraced a simple idea: Investors want low-cost index funds. That explains why Vanguard runs the three biggest stock market funds and six of the 10 largest. Its Vanguard Total Stock Market Index Fund was the first to reach $1 trillion in assets.

Vanguard achieved this market-leading position without slick advertising, catchy slogans, star managers or any of the other typical Wall Street trappings. Vanguard’s formula is to serve up passive management – its index funds don’t aim to beat the stock market but simply to match it. And Vanguard charges investors almost nothing for the privilege of owning exposure to the market. While Vanguard holds a 29% market share, it collects just 5% of industry revenue. Bogle envisioned building an investment colossus that didn’t dole out big commissions. “We...

About the Author

Eric Balchunas is senior ETF analyst at Bloomberg Intelligence. He is a frequent speaker at industry events and conferences, and he is the author of The Institutional ETF Toolbox.

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