This is black-bar worthy — he did touch a lot of us with his work, and I’d like to think that he’s one of the few reasons the wealth generated in Silicon Valley largely stays to fund the next generation of startups (like mine). I’ve lost count of how many times I’ve recommended Vanguard personally.
> and I’d like to think that he’s one of the few reasons the wealth generated in Silicon Valley largely stays to fund the next generation of startups (like mine).
This is not directly true. Vanguard mutual funds provide 0.05% annual fee rather than ~1% annual fee to access the average return of an index (whether the index is the S&P500, or every publicly listed company in the US). While the low-cost has empirically provided a better (compounding) return for investors over the decades, Silicon Valley angel investors and VCs have generated their wealth from their own businesses, and re-invest some portion of it directly into the next generation of unlisted companies. The extra 1% annual return gained by accepting the average stock market return (at exceptionally low cost) is not what's driving startup investment.
That said, the lower expected average market return (because the stock market being relatively highly valued, after the recovery from the 2008 crash, due to both record low interest rates, and to some degree a blind movement of capital towards index funds) may have some impact on temporarily increased VC dollars, trying to chase some kind of reasonable return.
A lot of wealthy Silicon Valley entrepreneurs, engineers, and investors park their personal wealth in Vanguard funds while looking for the next wave to invest in. It's not that they're getting rich off of money invested in index funds, it's that index funds crowd out private wealth managers who might otherwise have been given carte blanche to invest their clients assets but not have the expertise to understand which new startups look promising.
Presumably the parent meant that Bogle popularized index mutual fund investing in 1976, thereby catalysing the passive investing industry.
And whereby there were previously only actively managed funds, the creation of that industry substantially lowered the cut money managers got from person wealth management.
Thereby leading to generations of people with more control over their money and willing to take risks, where a professional money manager would have little incentive to invest in startups with wealth locked up in their funds.
It's really amazing work he did considering that after the move to 401k and away from pensions in the private sector, there really are now few alternative paths to secure retirement.
The move away from pensions could have been a veritable smorgasbord of fees for actively managed funds, but Vanguard provided broad access to something just as good (and more often than not, better[1]).
