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The cult of the founder weighs on Vanguard

Vanguard’s aggressive move into the clubby world of the investment advisory business looks set for a clash with John C. Bogle’s legacy
The cult of the founder weighs on Vanguard
  • Jack Bogle founded Vanguard to champion the average investor and bring fund costs down 
  • The company has launched an adviser service which seeks to live up to his legacy 

It is an old truth in business that the founder of a company casts a long shadow over his or her successors. This can influence its priorities, its culture and even its long-term approach to investment and business decisions. One of the oddest reporting experiences I can remember was a Chinese solar cell company whose founder and chairman - a gentlemen named as such in all the legal documents – exerted control and made business decisions, despite the apparent inconvenience of being dead; his wife would communicate his wishes to the rest of the board via the services of a medium. North Korea appears to have a similar arrangement with its “President for Eternity” Kim Il Sung.

Which brings us neatly to the world of global fund management and the recent sad passing of Vanguard founder John C. Bogle (1929-2019). Bogle’s activism over the years as an investor champion, and consistent innovation to bring down the costs of fund investing, made him something of a folk hero to retail investors in the US. From the invention of index-tracker funds, to no-load sales (absence of commission or fees on initial investments) and a structure that did away with an expensive over-arching fee-charging management company, Vanguard became an admired cost-conscious brand.    

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