The Bogle Impact: A Roundtable

February 28, 2012

In his long career, John Bogle has influenced countless financial professionals and investors. The Journal of Indexes reached out to some of his best-known colleagues, rivals and friends to ask them about how his advocacy has affected them and its lasting impact on how Americans invest.

GusSauterGus Sauter,
CIO, Vanguard Group

JoI: What impact has John Bogle had on you as an investor and financial professional?

Sauter: I entered the industry with a more theoretical approach to investing, and Jack helped me understand the practical side.  Indexing works, not because markets are efficient, but because it doesn't have the high cost burden of active management.

JoI: What is your current long-term market outlook? Do you think traditional buy-and-hold index-based investing has a place in that market scenario?

Sauter: There's always a possibility for just about anything to happen, but the stock market has reasonable valuations, and so historical rates of return are quite possible over the long term. Bond yields are extremely low, so the longer-term prospect for bonds is likely to be less than historical returns.

JoI: What do you think John Bogle has gotten wrong?

Sauter: Jack and I agree on many things, but we also disagree about certain topics, including the use of ETFs. I believe they can be used as a very effective way for many advisors and direct investors to gain low-cost, indexed exposure to the market. Let's just say Jack disagrees with that view.

JoI: What do you think John Bogle's lasting impact will be on investing and investors?

Sauter: Not only did Jack create a company solely dedicated to the interests of investors, but he also created indexing in the mutual fund industry. Many, many investors are much better off today because of Jack's contributions.

 WilliamBernsteinWilliam Bernstein,
Principal, Efficient Frontier Advisors LLC

JoI: What impact has John Bogle had on you as an investor and financial professional?

Bernstein: Two big things. First, he has taught me the importance of institutional structure and culture. He did that not so much through his words, which are powerful enough, but through his deeds. His biggest deed was of course his donation—there's no other word for it—of Vanguard itself to its fund investors. It's almost as if Ford or Procter & Gamble issued shares to the people who bought their cars and soap, or if Bill Gates had given away a piece of Microsoft to each purchaser of Windows. Vanguard's culture is thus entirely different from that of any major corporation, and especially from any financial corporation. The typical bank, brokerage or mutual fund company would have you believe that the best interests of its customers and owners are the same. If we have learned anything during the recent financial crisis, it is that this is a fiction.

Second, he's shown me that you never stop moving, never stop striving. Most people in his position would have long since gone to the beach, done the odd charity gig. He's still learning, still trying to improve the world, still making a difference, still reaching out and helping people with an almost superhuman vigor.


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