John (Jack) Bogle is both the founder of the low-cost mutual fund company Vanguard and the creator of the first index fund available to the public. These days he spends his time speaking about corporate ethics and how index funds are great investments for the vast majority of people. But what does he invest in?
According to this Morningstar article An Inside Look at Jack Bogle’s Portfolio, the answers may surprise you.
Overall Asset Allocation?
“My current asset allocation overall is about 60% bonds and 40% stocks. There’s a fair amount of money involved here, and I feel no need whatsoever to overdo equities. After all, if stocks (surprisingly) soar–I’ll do just fine, not in percentage terms but in dollar terms.”
Stocks – Active or Passive? Value or Growth?
The article is a bit cryptic, but by how I interpret it he seems to be split down the middle:
50% Passive – Total Market Index Funds
50% Active – Vanguard Explorer, Wellington, Wellesley Income, and Windsor Funds
So Jack tilts his portfolio to the value side of the style box. That style tends to be more conservative and puts more emphasis on stocks paying dividends.
The bonds portion seems to be conservatively invested in 50% Short-Term Bonds and 50% Intermediate-Term Bonds.
Last time we talked to Jack, he had shifted away from long-term bonds and GNMAs. This time, we see that Jack is moving into TIPS (Treasury Inflation Protected Securities). “In fact, the only investment change I’ve made in the past few years is a move of about 6% of combined assets from Vanguard Intermediate-Term Bond Index VBILX to Vanguard Inflation-Protected Securities VAIPX . The latter is essentially a similar index fund, but with a possible advantage if inflation heats up more than the present discount suggests. I probably should have added to my holdings in the inflation-protected fund earlier.”
Even though this article isn’t the reason, I am starting to rethink my bond allocation to add exposure to inflation-indexed bonds. This would provide an additional hedge against some unexpected inflation.
Before anyone uses his portfolio as a model, consider the following:
- He’s 78 years old (76 at the time of this article), and even though he had a heart transplant, is still working. This guy likes his job.
- He has enough money that he doesn’t even need to withdraw anything to maintain his lifestyle. I would imagine he’s probably just trying preserve wealth as much as achieve growth.
- Since he’s the founder of Vanguard, he may have some sentimental or loyalty reasons to hold certain funds, and states as much.
I doubt many people reading this are in a similar situation Really, the only thing that I can take away from this is that there really is no “perfect” portfolio for everyone. But it certainly satisfied my curiosity; I wish more investment personalities would share their actual portfolios. You can see my imperfect portfolio here. I’m going to attempt to simplify it a bit sometime in the coming months as well.
By Jonathan Ping | Investing | 6/1/07, 3:32am