MENU

Meet Warren Buffett’s Investing Hero, Jack Bogle

Warren Buffett, the Oracle of Omaha, is a hero to many investors. As the chairman of Berkshire Hathaway, Buffett has produced a compounded annual gain of 19% in the company’s book value between 1965 and 2016. Shareholders who stuck with Buffett’s company through the period would have turned every dollar invested into almost two million dollars.

But, the Oracle of Omaha has investing heroes of his own.

The hero’s hero

In Berkshire Hathaway’s latest annual report, Buffett highlighted one such hero:

“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. For decades, Jack has urged investors to invest in ultra-low-cost index funds.”

Jack Bogle is widely recognised as the “father of index funds.” In 1976, Bogle was the first person to launch an index fund for retail investors. An index fund seeks to replicate the movement of a stock market index.

The most prominent feature of Bogle’s index fund was the low fees that it charged investors, which stood in stark contrast to the high fees that actively managed funds charged. This difference in fees still stands today.

Buffett also recounted Bogle’s earlier struggles:

“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.”

According to a 2015 Time Magazine article, over 82% of actively managed funds failed to beat lower cost index funds when their returns were measured over a period of 10 years.

At home in Singapore, the SPDR STI ETF (SGX: ES3) follows in the footsteps of Jack Bogle’s index funds. The exchange traded fund mimics Singapore’s market barometer, the Straits Times Index (SGX: ^STI). From its inception (11 April 2002) up till the end of February 2017, the SPDR STI ETF has recorded total annual returns of 7.15%. If you would like to learn more about the SPDR STI ETF, you can  head here.

If Buffett’s your investing hero, then perhaps Jack Bogle can be a hero for your stock portfolio as well.

For more (free!) stock market analyses and investing tips, sign up here for your FREE subscription to The Motley Fool's weekly investing newsletter, Take Stock Singapore. It will teach you how you can grow your wealth in the years ahead.

Like us on Facebook to follow our latest hot articles. The Motley Fool's purpose is to help the world invest, better.

The information provided is for general information purposes only and is not intended to be personalised investment or financial advice. Motley Fool Singapore contributor Chin Hui Leong owns shares in Berkshire Hathaway.