Vanguard's Bogle Facing Retirement Selena Maranjian (TMF Selena)
August 12, 1999
John Bogle, founder and Senior Chairman of The Vanguard Group, is facing retirement at the end of the year. According to current rules for Vanguard's board of directors, directors are to step down by the end of the year in which they turn 70. Bogle hit the big seven-oh this May.
Daniel Wiener of the Independent Advisor for Vanguard Investors newsletter pointed out that the retirement doesn't necessarily have to occur. The board has the power to change the rules. He notes, though, that the board's chairman and Vanguard's current CEO, John Brennan, haven't always seen eye to eye. If the board chooses not to change the rules, he suggests, it'll be tantamount to forcing Bogle out.
Losing Bogle would be a true blow to Vanguard. Under his leadership, the company introduced the first S&P 500 index fund in 1975, and he's been a proponent of index funds for decades. The fastest-growing mutual fund company, Vanguard now sports about half a trillion dollars under management, with its flagship S&P 500 index fund holding more than $90 billion. In many ways, Bogle was a Fool before there were Fools. The newly created index fund was even laughed at as "Bogle's Folly." (Perhaps proving the point, this year Bogle was spotted sporting a Fool ballcap at a recent appearance with the brothers Gardner at the Washington Post's investor conference.) Bogle has long pushed for low expenses in mutual funds and has advocated no-load funds.
Beyond offering investors effective index funds, Vanguard has long exhibited admirable business practices. On its website's front page, for example, it recently ran an article urging people to not invest in mutual funds just before a distribution, as it can generate unnecessary taxes. How many companies ever urge people to put off buying their wares?
Reading Bogle's many writings and speeches, his Foolishness is apparent. Check out the humility in this snippet of a commencement address on leadership:
"What can this aging warrior tell you about creative leadership? Honestly, I am not sure. For I am, like each of you, a peculiar balance of contradictions: a large ego and a deep humility; a decent intelligence (no more than that), albeit with periodic blind spots and stupidities; a strong presence along with a profound insecurity; an astonishing confidence, but one that is often punctuated with doubt; an intellectual bent that lacks an academic depth; an aspiring, passionate leader, but without the skills -- or, for that matter, the interests -- of a manager. I mention this litany to suggest that I'm no more, nor less than each one of you: just another human being."
Earlier this year, Bogle gave a remarkable speech on "The Clash of the Cultures in Investing: Complexity vs. Simplicity." An excerpt:
"In short, the simple -- utterly, infinitely simple -- concepts of indexing are of surpassing importance in investing your Serious Money Account. By focusing on the long term -- always the long term -- indexing holds the master key to your investment success. These three final charts beautifully exemplify how time -- the fourth and crucial temporal dimension of investing -- interacts with reward, risk, and cost, the three spatial dimensions. Do not fail to apply these three simple concepts to the simple idea of index investing."
Mr. Bogle -- if you need a job come December, give us a holler. We're always hiring, and we can use an aging warrior.
You can read more of Bogle on investing at the Vanguard website's library. Or read his book, Common Sense on Mutual Funds. The Motley Fool's Mutual Fund area might also be of interest. Also, check out this look at The Vanguard Group, a company we wish would go public.