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For Americans, Warren Buffett included, the late John Bogle is a financial folk hero. His creation, the $7.7trn Vanguard Group, is a household word. For context, the house that Bogle built manages assets 22 times South Africa's GDP on behalf of 30 million clients.
Bogle's mission was to offer small investors low costs with returns that matched the stock market. His index funds grew from an oddity to ubiquity. Buffett loves to tell pilgrims at the annual Berkshire AGM that his wife Astrid will receive her inheritance via units in Vanguard's S&P500 Index Fund.
A big part of Vanguard's success is the now wide acceptance among investors that few active managers beat the indices, and as a result, there has been consistent outperformance by passive funds. Plus, Vanguard's super-low fees. Astrid's S&P500 fund charges a fee of just four basis points a year – the Vanguard website says its prices are 83% less than fund averages in the highly competitive US market.
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