A Triumphant Bogle Predicts a Giant Fund Firm Deal
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Wednesday, September 07, 2016

A Triumphant Bogle Predicts a Giant Fund Firm Deal

In an interview with the WSJ, Saint Jack also shares his U.S. presidential election pick, points to a favored active asset manager, reflects on his big anniversary last week, and more. Over Labor Day weekend Saint Jack predicted a huge bit of asset manager M&A, celebrated a big anniversary, shared his vote for President of the United States of America, and even threw some praise to an active asset manager.

John Bogle
Founder, Retired Chief Executive Officer
Those tidbits and more all come out in a new Jack Bogle profile, penned by Holman Jenkins, Jr. and published by the Wall Street Journal on Friday night. The profile follows the 40th anniversary last week of the first index mutual fund, which Bogle's Vanguard [profile] launched on August 31, 1976.

Fundsters and Bogleheads alike may find the profile of interest. Bogle, naturally, takes big swipes at the rest of the mutual fund industry, noting that, in the 12 months ended May 31, $224 billion net flowed into Vanguard while all other fund firms combined suffered $137 billion in net outflows. He likens the active-passive divide to selling doughnuts (active funds) versus selling bagels (passive funds).

Bogle predicts that active asset management "will shrink" and he even claims that one of Vanguard's giant mutual fund industry rivals will change hands in the not-too-distant future.

"In five years, Fidelity [emphasis added] will be sold," Bogle tells the WSJ.

On the U.S. presidential race, Bogle shares his reluctant choice for 2016.

"My friends, they want to vote for Hillary, a lot of them," Bogle now tells the paper. "I don't want to but I'm going to."

(Back in 2008, Bogle, a Republican, temporarily switched his party registration to Democrat to vote for Barack Obama in the primaries, when Obama was running against Hillary Clinton.)

Bogle even, in the words of the WSJ, believes that some "smart big-money investors" exist. Bogle even points to AQR Capital Management [profile] chief Cliff Asness as one such smart, active investor.

Vanguard watchers may also want to dig into the profile. The WSJ writes that, following Bogle's mandatory retirement at age 70 (Bogle is now 87) and after a decade of "hard feelings" that "Bogle professes not to understand," relations between Bogle and the famous fund firm he founded "are much warmer now":

Teams of Vanguard workers seek him out for briefings. Mr. Bogle tells me a couple of senior managers have been detailed to hear out any ideas or criticisms he cares to offer.

Mr. Bogle is no idolater of the management art, not even his own. "I think a lot about leadership and I've come to the conclusion, by and large, it's overrated, and that includes you know who."

Left unmentioned in the article are: Jack Brennan, who succeeded Bogle as chief; Bill McNabb, who took over for Brennan and leads the firm now, and: who those "senior managers" are who have been tasked with gathering ideas and feedback from Bogle.

Other topics the profile covers include: Bogle's heart transplant in 1996 (possibly from a nameless, 26-year-old male?); his own missteps at Wellington prior to founding Vanguard; how he allocates his own investments; and more.

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