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Thursday, September 01, 2016

The Big Index Mutual Fund Four-Oh

News summary by MFWire's editors

The world's biggest mutual fund company, the mutual fund industry as a whole, and the industry's most famous insider-critic all celebrated a big milestone yesterday: 40 years of indexed mutual funds.

Jack Bogle
The Vanguard Group
Founder and Retired Chief Executive Officer
On August 31, 1976, Jack Bogle's Vanguard [profile] launched the First Index Investment Trust (since rebranded as the Vanguard 500 Index Fund). Four decades later, the fund once mocked as "Bogle's Folly" now holds $252 billion; that's 22,300 times its launch AUM of $11.3 million in 1976. And indexed mutual funds and ETFs now hold nearly $5 trillion in combined AUM.

Vanguard put out a statement, "Let the low-cost, passive party begin." And Bloomberg and the Wall Street Journal both offer fundsters a walk down index fund memory lane and even beyond. They highlight indexing's early critics, as well as the advocacy and influence of analyst Ben Graham, economist Paul Samuelson and others on the creation of index funds.

"He became in many respects my mentor," Bogle, talking to the WSJ, says of Samuelson. "I would put the phone on speaker so I could write down his ideas as he rattled them off."

Oh, and though index funds have boomed in the last two decades, Vanguard's indexing Rome wasn't built in a day. Bogle reminds Bloomberg that the first fund started out as "a complete flop."  

Edited by: Neil Anderson, Managing Editor


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