Bogle effect

Many books have been written about Bogle and Vanguard Capital, his contribution to the investing community in making mutual funds attractive with low costs and exemplary service. This book is a worthy addition and details the entire journey starting with the formation of Vanguard Capital and how it has become the largest asset manager holding about 30% of the index funds market. Here is a brief synopsis of the book and his stellar role in making mutual funds more accessible to investors.

John Bogle founded Vanguard Group, the world's largest mutual fund company. He is considered the father of index investing. Index funds are mutual funds that track a market index, such as the S&P 500. They offer a low-cost way to invest in a diversified portfolio of stocks. Bogle's philosophy is that investors should focus on long-term returns and keep costs low. He believes that index funds are the best way to achieve these goals.
Before Bogle devised his strategy, the overall cost to the investor could be as high as 2% of invested funds. This included up to 5% in sales commissions, 2% of administrative expenses, and additional trading costs for buying and selling on behalf of the funds.
John Bogle brought down the investor costs in index funds through several innovative strategies. He eliminated Sales Commissions by selling index funds directly to investors without charging sales commissions. He reduced management fees by keeping fees extremely low. He eliminated the fees charged by third-party brokers and custodians. He focused on operational efficiency to keep costs low and pass the savings on to investors. This helped Bogle to create index funds with significantly lower costs than traditional actively managed funds, made index investing accessible to a much wider range of investors and helped to democratize the financial markets.
Vanguard has a unique mutual ownership structure. It's not a publicly traded company owned by shareholders, but rather by its funds. Those funds, in turn, are owned by the investors in the funds. The investors are the ultimate owners. The ownership structure is a key differentiator and a big reason why the company has been so successful in attracting and retaining investors.
Vanguard Capital, the company he founded, is now one of the world's largest asset managers, with over $8 trillion in assets under management. Committed to its core values of low cost, transparency, and client-focused service, which will continue to be important in the years to come.
It is a book that everyone should read to understand the mutual fund industry especially passive funds and the basic principles of investing.

When I was growing up, the way to get children interested in the stock market was to have them choose a stock and track it in the newspaper. This was before the internet and before, if this book is correct, one of the greatest inventions in the investing world: the index fund.

An index fund is a relatively simple concept. Just buy the whole market. You won’t get the outperformance from the big winners but you won’t get the pain of picking big losers either. And it should be cheap. Like, really cheap.

That last part is where John Bogle comes in. This book written by Bloomberg’s esteemed Eric Balchunas weaves together stories, interviews, Bogle’s books, and his own work to tell the story of the creation of Vanguard and what it has meant to the investing community.

We think nothing these days of investing being inexpensive and easy. We forget that the barrier to entry was once a lot higher. We have more information than ever for evaluating companies. But here’s the thing, information isn’t knowledge. Most of us aren’t good stock pickers. Just buy an index fund seems like a facile answer but for most of us, it’s the right one, even Warren Buffett agrees.

Bogle was a complicated figure. A hero but also petty, driven, full of ego and contradictions. However, the revolution he created the shift into index funds and, whether he liked them or not, ETFs, has changed the investing world. There are some mixed blessings to this including the power that Vanguard, BlackRock and their ilk wield when it comes to company ownership. But what it did for small retail investors, how it democratized investing by making it cheaper and easier is huge.

For most people Vanguard’s just a name they see listed on their 401(k) next to some inscrutable letters usually. They have no idea they have participated in one of the biggest changes in investing, taking power back from active managers (who still exist and who definitely have a purpose), and acknowledging that cost and taxes are as much a part of investing as numbers going up or down.

This book was an excellent explanation of John Bogle’s method of investing. It is very informative and easy to understand. I look forward to implementing the Bogle method in my own investing and recommending this book to students.

Jack Bogle saves investors trillions of dollars

By Jack | April 23, 2022 | Book Review

Who would want to read this book? Maybe you would if you are interested in Jack Bogle, Vanguard, investing, money, or any combination of those things. Those listed are all related and this book is great explanation of how.


The full title is The Bogle Effect: How John Bogle and Vanguard Turned Wall Street Inside Out and Saved Investors Trillions by Eric Balchunas . The book is not being published until April 26. But it is available for preorder or it might be something to add to your “to do” list I thank NetGalley and BenBella Book for the opportunity to read it in advance.

I must disclose that I am a big admirer of Jack Bogle and an investor in Vanguard funds. When I saw this book was available on NetGalley, I jumped at the chance to read it before publication. I enjoyed it immensely and learned quite a bit.



All the factors I mentioned (Jack Bogle, Vanguard, investing, money) are closely related. To oversimplify, Jack Bogle founds Vanguard as a mutual company, that is one owned by the investors in its funds. Instead of the founders or stock holders making large profits from investment fees that money is returned to the investors as lower fees. He then uses the idea of an index fund to provide superior results at low costs.



The constant lowering of costs benefits Vanguard Investors directly but also benefits others indirectly since other companies must lower fees to compete with Vanguard. Yes, Jack Bogle saved investors quite a bit of money and caused major changes in the financial services industry.



The is an important story and it is well told Eric Balchunas.