The Radical Invention of the Index Fund, with Robin Wigglesworth


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#347: Back in the 1960’s, Jack Bogle thought that actively-managed mutual funds performed better than a passive indexing strategy.

He pseudonymously published a paper saying so.

But academic data from the University of Chicago challenged his preconceived notions. He attended seminars that showed how the drag on returns that come from management fees and trading costs, coupled with the reality that the bulk of gains come from a hard-to-predict handful of equities (a concept known as “skew”), lead to index funds holding long-term outperformance.

At the time, index funds were only available to major institutional investors. Regular folks couldn’t access these winners.

And that might have continued for a long time …

… except history turned on a dime.

In the early 1970’s, Jack Bogle got fired. Rather than accept defeat, he turned into a renegade. He launched Vanguard and began offering index funds to ordinary individual investors.

And the rest, as they say, is history.

In today’s episode, we learn about the revolutionary ideas that paved the path to passive investing.

We learn about the radical invention of the index fund.

We discover the drama, the tenacity, the betrayal and redemption behind it.

And we discover the lessons that the history of the index fund holds.


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443 episoder