Players in the mutual fund business can earn tons of money and accumulate immense amounts of wealth. In a profile two weeks ago, the New York Times told us that Mohamed El-Erian of bond fund PIMCO “was paid about $100 million last year.” Billionaire Bill Gross made twice that amount.Members of the Johnson family, who are behind mutual fund giant Fidelity, regularly show up near the top of Forbes’ list of billionaires.
But Jack Bogle, who is perhaps the most recognised name in the mutual fund industry, isn’t nearly as wealthy as his peers.
From a new gigantic profile in the New York Times:
“Strategy follows structure,” he says, explaining that with no parent company or private owners to siphon profits, Vanguard can keep costs lower than anyone else. That was always his goal. “The only way anyone can really compete with us on costs is to adopt a mutual ownership structure,” he says. “I’ve been waiting all these years for someone to do it, but no one has.”
One reason is surely that there’s no profit in it. Despite Vanguard’s size and success, Mr. Bogle is no billionaire. For comparison, Forbes lists the personal wealth of Edward Johnson II, who stepped down as Fidelity’s chairman last year, as $5.8 billion. By contrast, Mr. Bogle says his own wealth is in the “low double-digit millions.” Most of it is in Vanguard and Wellington mutual funds in which he invested via payroll deduction during his long career.
During his peak earning years at Vanguard, he regularly gave half his salary to charities, including two alma maters — the Blair Academy, a prep school in Blairstown, N.J., and Princeton University. He was a scholarship student at both, holding down part-time jobs to help pay his way. At Princeton, in a senior thesis, he sketched the rough outlines of the cost-cutting, shareholder-serving company that would become Vanguard.
Mr. Bogle continues to make donations to several causes. “My only regret about money is that I don’t have more to give away,” he says.
Sure, “low double-digit millions” is still a lot of money. But you’d think he’d be so much more wealthy for his unparalleled contributions to finance.
Then again, it would probably be hypocritical for someone pushing the principle of low cost to be ultra wealthy.
The Times’ profile on Bogle is pretty comprehensive. Read it at NYTimes.com.
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