John Bogle Gives Insights on 4 Industry Trends

Vanguard founder John Bogle shared insights he’s learned during his 66-year history in the industry – including how he came to persuade Vanguard’s board to approve the “creation of the world’s first indexed mutual fund” – with the audience gathered at Morningstar’s annual investment conference.

In a prerecorded video, Bogle, 87, gave a speech at Morningstar Investment Conference in Chicago. Bogle then joined live via video for a question-and-answer session.

Here are a few insights that Bogle offered on a wide range of topics.

1. On indexing:

“Once considered unthinkable, indexing has triumphed,” he said. “And active managers will have to either join the index revolution and/or expand their range of investment options by developing new active investment strategies. Or, do nothing. Whatever the case, active fund managers are not going to vanish from the earth.”

2. On fee compression:

“The investment advisor is almost pushed into using lower cost funds, including index funds,” he said. “…The advisor is changing its own role – it seems to be more asset allocation and broad investment advice than the stock-picking role.”

Bogle said he looks at the fee structure as evolving.

“I don’t think we’ve reached the final compensation structure for investment advisors, and that may change more like legal advice, legal services, lawyers. I think like that. There’s a fee for service,” he said.

3. On a 50/50 portfolio:

Bogle shared a letter he’d recently received from “a young man” who was worred about global disease and pandemics and religious war, nuclear war, global warming.