LyrArc Article Gist
At a time of volatility and anxiety in financial markets Americans put their trust in Vanguard Funds. Vanguard funds took in 40% of the entire cash flow of the mutual fund industry in the first half of 2012, $87.7 billion went to Vanguard excluding money market funds. This was largely because of the index funds which Vanguard originated and which were Bogle's invention. Today Bogle, 83, still speaks up for investors and investing for the long run, on staying away from speculation and protecting U.S. financial markets from speculative behaviours. He says the financial industry has to put investor and client interests first, with no excuses made for behaviour, period, at a time when the financial industry has lost its compass and direction. Bogle heads the research center at Vanguard Funds following disagreements with his hand picked successor Brennan, and leaving the Board in 1999. The current head at Vanguard Funds, CEO McNabb, says Vanguard owes its success to all the foundations set by Bogle. Bogle says strategy follows structure, and the structure he built of investor ownership of Vanguard Funds prevents a situation where owners can siphon off funds, or engage in activities that would hurt investors. Bogle's differences with Brennan came from his efforts to institutionalize other ideas such as investing for the long term, and shunning frequent trading which could happen with the creation of exchange traded funds (ETF's). Bogle has had several heart operations since 1999, and a successful heart transplant. This has not slowed his adocacy efforts on behalf of investors, with 11 books on investing and safeguarding financial markets from excesses of the kind seen in the 2008 financial crisis. The most recent book is "The Clash of Cultures: Investment vs. Speculation" (Wiley & Sons, $29.95). In the book he calls for a grass roots effort by investors to protect America's retirement system, and finances of younger parents with children to send to college, from the damage that is happening with the financial system in acute stage of dysfunction.