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John “Jack” Bogle, founder of Vanguard Group and creator of the world’s first index fund, is considered by many as a legend — as well as a hero to some of the greatest minds in finance.
Bogle, who passed away on Wednesday at age 89, leaves behind scores of people who are grateful for his contributions to investing, including another industry titan — Berkshire Hathaway’s Warren Buffett.
During the annual Berkshire Hathaway shareholder meeting in 2017 (video above), Buffett said: “Jack Bogle, who I talked about in the annual report, Jack Bogle has probably done more for the American investor than any man in the country. “Jack, could you stand up? There he is.”
Buffett then said that “when Jack started, very few people, and certainly Wall Street, did not applaud him. And he was the subject of some derision and a lot of attacks. And now, we’re talking trillions when we get into index funds …
“I estimate that Jack, at a minimum, has saved, left in the pockets of investors without hurting them overall in terms of performance at all, gross performance,” Buffett said. “He’s put tens, and tens, and tens, of billions into their pockets. And those numbers are going to be hundreds and hundreds of billions over time.”
He added: “So it’s Jack’s 88th birthday on Monday. So I just say, Happy Birthday, Jack. And thank you on behalf of American investors.”
Buffett then joked that that two years from then — 2019 — Bogle would become “eligible for an Executive Position at Berkshire. So hang in there, buddy.”
The gold standard
Vanguard, which has about $4 trillion in assets under management, is seen as the industry leader in cutting fees for investors. Their S&P 500 index mutual fund, which is designed to simply track the performance of the benchmark index, charges 5 basis points per year in fees.
This chart from Vanguard is perhaps the easiest distillation of the company’s motivating principle: minimize fees to maximize returns.
It was ‘much more than a shoutout’
Later on in the day, Bogle said that Buffett’s mini-tribute was “much more than a shout out,” telling Yahoo Finance’s editor-in-chief Andy Serwer that “it made me feel — I mean, I’m just a human being, Andy — it made me feel absolutely wonderful.”
He continued: “For a man like that to recognize it, recognize what I’ve done. And he’s been a great booster of our 500 index fund. He’s been a great booster of my books, which is always nice at the box office there.”
Bogle added that he first met Buffett at the time of the Solomon Brothers, when they both spoke out against the company from the West Coast. “That was the first time I met him — in San Diego. And we’ve had a very nice relationship ever since.”
In the letter to Berkshire shareholders that year, Buffett wrote: “If a statue is ever erected to honor the person who has done the most for American investors, the hands-down choice should be Jack Bogle.”
He went on: “For decades, Jack has urged investors to invest in ultra-low-cost index funds. In his crusade, he amassed only a tiny percentage of the wealth that has typically flowed to managers who have promised their investors large rewards while delivering them nothing – or, as in our bet, less than nothing – of added value. In his early years, Jack was frequently mocked by the investment management industry. Today, however, he has the satisfaction of knowing that he helped millions of investors realize far better returns on their savings than they otherwise would have earned. He is a hero to them and to me.”
Myles Udland contributed to this post.
Aarthi is a writer for Yahoo Finance. Follow her on Twitter @aarthiswami.