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By Walter Updegrave
March 23, 2016

A recent report from the Investment Company Institute says that competition, asset growth and greater use of index funds has steadily pushed mutual fund fees to a 20-year low, from just over 1% a year on average for stock funds in 1995 to less than 0.70% today. True enough, as far it goes. But as someone who covered funds and investing during much of that period, I’d add that one man deserves a heaping share of the credit for the trend toward lower fees, not to mention the huge benefit today’s investors derive from slimmer costs: Vanguard founder and retired CEO John Bogle.

When I arrived at Money Magazine in the mid-1980s as a (relatively) fresh-faced, young reporter, actively managed funds were all the rage. Index funds existed, but they were viewed with skepticism, even derision. After Vanguard introduced the predecessor to what is now the Vanguard 500 Index in 1976, critics referred to it as “Bogle’s Folly.” Most fund coverage back then consisted of profiling managers who had a hot hand recently and who, hope against hope, might continue their run indefinitely into the future.

But the prevailing view that smart investing meant searching for funds that might beat the market began to change, as Bogle essentially waged a one-man campaign to convince investors that they were actually better off putting their money in low-cost index funds that track the market rather than paying lofty fees to managers to try (and usually fail) to beat it.

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That message was so powerful—and Bogle delivered it so persistently—that eventually it began to sink in even with the financial press. In August 1995, I was part of a team of editors, writers and reporters at Money who produced a cover story that laid out in detail indexing’s advantages over active investing and recommended that investors keep the core of their portfolios in low-cost index funds. In an editorial in that issue, Tyler Mathisen, then Money’s executive editor and now anchor of CNBC’s Power Lunch and public television’s Nightly Business Report, wrote that “more often than not, aiming for benchmark-matching returns through index funds assures…a better-than-average chance of outperforming the typical managed stock or bond portfolio. It’s the paradox of fund investing today: Gunning for average is your best shot at finishing above the average.”

Over the next 20 years, Bogle’s mantra of sticking to low-fee index funds gained more and more traction with individual investors. The number of index funds ballooned, huge amounts of cash rushed into them and investors savvy enough to take advantage of indexing’s low costs prospered. I don’t think it’s stretch to say that many people are enjoying more comfortable retirements today than they otherwise would (as will even more tomorrow) because of Bogle’s relentless warnings of how “the tyranny of compounding costs” erodes investors’ wealth.

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Would all of this have happened without “Saint Jack” (the nickname used endearingly by Bogle’s fans and derisively by his foes)? I suppose someone else might have championed the cause of indexing and low expenses if he hadn’t. Or that another fund executive or company would have seen a niche in the marketplace and exploited it. But such speculation aside, I don’t think there’s any doubt that Jack Bogle played a (if not the) major role in bringing indexing into the mainstream and, in so doing, putting pressure even on actively managed funds to reduce their expenses.

That’s not to say that fees can’t, or shouldn’t, go lower. Indeed, in its 2015 fee study, Morningstar points out that while fund fees have dropped, “the trend is being driven more by investors seeking low-cost funds than it is by fund companies cutting fees.” The report went on to note that while “asset growth has also spurred fee reductions…much of the increased economies of scale are going to the fund industry rather than investors. Assets under management have risen faster than fees have fallen.”

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Still, investors who want to reap the considerable benefits of indexing and low fees—whether saving for retirement or spending down their nest egg—should have no little if any trouble doing so today, as index funds and ETFs are widely available with fees that in some cases below 0.10% of assets per year. And for that, more than any other single person, investors have John Bogle to thank.

Walter Updegrave is the editor of If you have a question on retirement or investing that you would like Walter to answer online, send it to him at You can tweet Walter at @RealDealRetire.