John Bogle, who simplified investing for the masses by launching the first index mutual fund and founding Vanguard Group, died on Wednesday. He was 89.
Bogle did not invent the index fund, but he expanded access to no-frills, low-cost investing in 1976 when Vanguard introduced the first index fund for individual investors, rather than institutional clients.
The emergence of funds that passively tracked market indexes, like the Standard & Poor's 500, enabled investors to avoid the higher fees charged by professional fund managers who frequently fail to beat the market.
Bogle and Vanguard shook up the industry further in 1977. The company ended its reliance on outside brokers and instead began directly marketing its funds to investors without charging upfront fees known as sales loads.
Bogle served as Vanguard's chairman and CEO from its 1974 founding until 1996.
He stepped down as senior chairman in 2000, but remained a critic of the fund industry and Wall Street, writing books, delivering speeches and running the Bogle Financial Markets Research Centre.
The advent of index funds accelerated a long-term decline in fund fees and fostered greater competition in the industry.
Vanguard, based in Valley Forge, Pennsylvania, manages $US5 trillion globally.
Bogle spent the first part of his career at Wellington Management Co., a mutual fund company, then based in Philadelphia. He rose through the ranks and, in his mid-30s, was tapped to run Wellington.
He engineered a merger with a boutique firm that was making huge sums, but was ousted after the stock market tanked in the early 1970s, wiping out millions in Wellington's assets. He said he learned an important lesson in how little money managers really know about predicting the market.
Bogle suffered several heart attacks and underwent a heart transplant in 1996, the year he stepped down as CEO. He reached the mandatory retirement age of 70 for Vanguard directors in 1999 and left as senior chairman the next year.
Vanguard did not provide a cause of death. Philly.com is reporting he died of cancer, citing Bogle's family.
John Clifton Bogle was born in May 1929 in Montclair, New Jersey, to a well-off family; his grandfather founded a brick company and was co-founder of the American Can Co in which his father worked.
Bogle graduated from Princeton with a degree in economics in 1951. His thesis was on the mutual fund industry, which was then still in its infancy.
He is survived by his wife, Eve, six children, 12 grandchildren and six great-grandchildren.
Australian Associated Press