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Is Vanguard Too Big?

Christine Benz

Note: This video is part six of nine of an interview between Morningstar's Christine Benz and Jack Bogle, founder of Vanguard, at the 2018 Bogleheads conference. Watch the other segments here.

Christine Benz: Another question I'd like to have you touch on is, is Vanguard too big as a firm? Because it really has been quite popular over the past couple of years in particular, where the flows have been tremendous.

John C. Bogle: That's a complex question. Here's this firm that I started with 28 people and $1.4 billion in Wellington Fund, that was our only fund at the time, and now it's 17,000 people and $5 trillion. I have seen and helped make it happen, coming into a much, much larger fund. I have told people, Christine, I never intended or wanted to build a colossus, but I was too darn stupid to realize that if we gave investors the best deal they had ever gotten or ever would get, I would build a colossus.

Is it good to be a colossus? Well, it's good in this way: helps more investors get a fair share of market returns. It's good in this way: helps more crew members, at least the way we run Vanguard, have a nice working experience, good working experience. I spend a lot of time with our crew, and this is not a perfect place, ever. But I'm very proud of the kind of work and culture and commitment and skill that we display on the crew level. There's a lot of personal affection, a lot of regard for the founder, which is nice.

You run the risk of impersonality, you run the risk of bureaucracy, of rules--all those kind of things. The idea of keeping the firm's values intact is one that will require a lot of work, particularly in leadership. It's a matter of leadership being seen, being around, caring. In my new book, which I guess we haven't talked about, called Stay the Course: The Story of Vanguard and the Index Revolution, I talk a little bit about this. A big part of the final chapter of the Vanguard history is called Caring--The Founder's Legacy. There's caring about one another out there in Valley Forge, Pa., is very important. Caring about our investors all over the world is very important. It's just a matter of, if you'll forgive me, giving a damn about the world around you, person by person. 

It has its good side and its bad side, and the bad side can be mitigated if there's a will and an intention, and enthusiasm for keeping the same values.