Today in Market History

42 years ago today, subsequent to being removed from his role as CEO at Wellington, Jack Bogle started the Vanguard group. Today the company is ubiquitous, their products are stuffed inside millions of brokerage accounts and sit on the shelves of nearly every 401(k) plan across the country. But it was far from an overnight success. They didn’t make it into the New York Times until 1977. Here are some of the snippets from their first appearance, Personal Investing: The Cost Questions of Mutual Funds:

Many of the common stock funds from which investors are fleeing in droves — mainly because of indifferent performance—have traditionally been sold through dealers at sales or so‐called load charges averaging 8.7 percent of the cash invested.

The new funds, on the other hand, have been sold outside the dealer structure mainly through direct mail, radio and print advertising on a no‐load basis. Income is the aim of both the money‐market and tax‐exempt funds. Since selling them at a load would wipe out the equivalent of more than a year and a half’s interest, the incentives are all in the direction of no‐load.

A little more than three months ago, the Vanguard group took all of its 14 funds—and better than $2 billion worth of assets—no‐load.

In 1966, according to John C. Bogle, president of the Vanguard group, no‐load sales accounted for only 5 percent of the industry total. By last year the no‐load slice of the market had expanded to 26 percent and in the first three months of this year it broadened to 43 percent of all sales.

If you’re looking for the definitive story on how and why Bogle formed Vanguard, I highly recommend reading The Clash of the Cultures. 


New York Times