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John Bogle’s Portfolio The Vanguard of Legends, How’s His Portfolio?

John-bogle-portfolio-investment

This article displays the portfolios by the absolute good guy in investing, Jack Bogle. Here you will find a description, performance, and resources for his portfolios as well as detailed information on how to implement them yourself.

John Bogle’s portfolio the vanguard of legends, how’s his portfolio?

John C. Bogle is the founder of Vanguard. Vanguard is a hugely successful mutual fund company. Vanguard is the only true mutual fund company because the mutual fund investors own Vanguard.

john-bogle-common-sense-on-mutual-funds

Vanguard has a unique governance structure that makes it so that Vanguard’s only mission is to look out for those who own shares of the mutual funds. John Bogle has structured Vanguard in such a way that the owners of shares are also the owners of Vanguard. The investors (owners) are all those people who own a Vanguard mutual fund or ETF.

John Bogle calls it the only mutual mutual fund company. So in essence when you own an ETF or a mutual fund from Vanguard you also own a slice of Vanguard!

“Owning the stock market over the long term is a winner’s game, but attempting to beat the market is a loser’s game.”

– John Bogle, Common Sense on Mutual Funds

This was a stroke of genius by John Bogle.

John Bogle had a lot to say about investing. One of his best books is John Bogle – Common Sense on Mutual Funds, where he dispenses most of his investing knowledge.

The ten rules of John Bogle

Here are ten rules of John Bogle’s investing wisdom that is often cited:

  1. Remember reversion to the mean.
  2. Time is your friend. Start early, stick to a plan. Let the miracle of compound interest work for you.
  3. Buy right and hold tight. Once you set your asset allocation, ignore moves in the market. Stick to the plan.
  4. Have realistic expectations. Rates of return in the coming decade are likely to be lower than the last. A seven percent annual return before costs and inflation for stocks and a 2.5 percent return for bonds before costs and inflation is reasonable.
  5. Forget the needle, buy the haystack. Don’t waste time buying individual stocks or stock funds. Cut your risk by purchasing broad-based index or exchange-traded funds.
  6. Minimize the “croupier’s” take. Minimize fees by investing in low-cost, low turnover funds. This increases your return.
  7. There’s no escaping risk. There’s no wealth without risk. If you don’t save, you’ll end up with nothing. And if you don’t invest for your retirement, your savings will be depleted by inflation.
  8. Don’t fight the last war. What worked in the past is no predictor of what will work in the future. The past is not prologue.
  9. The hedgehog beats the fox. Foxes are sly and represent financial institutions that sell complicated products and charge high fees for advice. A hedgehog does one thing when threatened — he curls up into a spiny ball. Simple, but effective, like an index fund.
  10. Stay the course. The secret to successful investing isn’t forecasting or good stock picking. It is about making a plan, sticking to it, eliminating unnecessary risks, and keeping your costs low.

The last rule Stay the Course is arguably the most famous of the rules. It has connotations to sailing through a storm or ignoring everyone else because you know you are doing the right thing. This is exactly what Vanguard and John Bogle has done. John Bogle named Vanguard after Horatio Nelson’s flagship at the Battle of the Nile, HMS Vanguard.

Vanguard Logo
Logo of Vanguard, see below a picture of the “real” HMS Vanguard
The real H.M.S. Vanguard
The real H.M.S. Vanguard – just beautiful!

“Buying funds based purely on their past performance is one of the stupidest things an investor can do.”

– John Bogle, John Bogle – Common Sense on Mutual Funds

John Bogle died last year, 2019, at the age of 89. To fully grasp the magnitude of how he has helped not only investors but everyone in society we recommend that you read our article Who Are The 3 Good Guys In Investing? The article digs into the numbers on how much money Vanguard mutual funds have saved investors. The savings will continue long into the future.

The legacy and genius of John Bogle still live.

Let’s take a look at what John Bogle recommended for your portfolios. Let’s look at John Bogle’s asset allocation.

Description of John Bogle’s portfolio

John Bogle has remained steadfast in his recommendation of appropriate asset allocation.

“I recommended—as a crude starting point—that an investor’s bond position should equal his or her age.”

– John Bogle, Common Sense on Mutual Funds

He leaves room for the investor’s objectives and risk tolerance.

“My favorite rule of thumb is (roughly) to hold a bond position equal to your age—20 percent when you are 20, 70 percent when you’re 70, and so on—or maybe even your age minus 10 percent. There are no hard-and-fast rules here. (Most experts think my guidelines are too conservative. But I am conservative.)”

– John Bogle, The Little Book of Common Sense Investing: The Only Way to Guarantee Your Fair Share of Stock Market Returns

John Bogle is probably more conservative than other investment gurus, at least in the accumulation (savings) phase. See below how that changes in the spending phase.

John Bogle recommends holding two asset classes:

  • U.S. total stock market
  • U.S. Total bond market

The reason that he does not seek international exposure is that American companies derive much of their revenue from overseas companies, so this is diversification enough. If you really want international exposure John Bogle recommends allocating a maximum of 20% of your stock portfolio to international stocks.

“I reaffirm my rule – of – thumb recommendation: Limit international holdings to no more than one – fifth of the equity portfolio.”

– John Bogle, Common Sense on Mutual Funds

In John Bogle’s book Common Sense on Mutual Funds (2008) he presents a clear recommendation of how to structure a portfolio.

As you can see he recommends that you at most allocate be 80% of your portfolio to stocks. I find it surprising however that the most conservative portfolio is a 50% stock and 50% bond portfolio. That is much more aggressive than many other retirement portfolios.

Clearly, such a rule must be adjusted to reflect an investor’s objectives, risk tolerance, and overall financial position. (For example, pension and Social Security payments would be considered bondlike investments.) But the point is that as we age, we usually have:

  1. More wealth to protect,
  2. Less time to recoup severe losses,
  3. Greater need for investment income, and
  4. Perhaps an increased nervousness as markets jump around. All four of those factors clearly suggest more bonds as we age.

John Bogle, Common Sense on Mutual Funds

Performance of Jack Bogle’s portfolio

Portfolio nameAsset class count1 year return (2019)Year to date10 year returnCAGR since 1989DrawdownRisk LevelExpense ratioYield
The Jack Bogle Portfolio221.97%2.61%9.68%9.09%-20.13%2 - low risk0.03%1.91%

Building the portfolio

Below you can see the asset allocations for the portfolio. You can also see if the portfolio has a socially responsible investing (ESG) variant portfolio. You can read more about socially responsible investing (ESG) investment portfolios in this post.
To build the portfolio yourself, go to our best in class ETF page to see which ETF you should choose for a particular asset class. There you can also see which socially responsible investing ESG ETFs you should select.

Asset Allocation for Jack Bogle’s portfolio

This one is for the 60/40 portfolio

  • 60.00%  US Total Stock Market   (VTI)
    40.00%  Total US Bond Market    (BND)

How we select the right ETFs

There are a lot of ETFs out there. Most of them can be discarded because:

  • They are too expensive
  • They hold too few assets and are therefore too illiquid
  • They do not meet the criteria for representing the asset class they are supposed to mirror.

We have carefully selected an ETF for each asset class that the portfolios on portfolioeinstein.com use. If you want to read more about our selection process and see what we consider the best ETFs please visit our article What Is The Best ETF?

As of 2020 we also track socially responsible investing ESG portfolios. Socially responsible investing (ESG) portfolios prioritize investing that puts an emphasis on environmental, social and corporate governance issues.

You can find the socially responsible investing ESG ETFs in the same article.

Resources for Jack Bogle’s portfolio

There a TONS of resources on John Bogle. Do a quick Google search if you require more knowledge about the investing apogee.

Barry Ritholtz interview with Jack Bogle on the Bloomberg podcast Master of Business

The two best books by John Bogle

  1. John Bogle – Common Sense on Mutual Funds
  2. The Little Book of Common Sense Investing: The Only Way to Guarantee Your Fair Share of Stock Market Returns

The bogleheads forum. 

Suggestions for your next steps

Finding the correct portfolio is hard. Maintaining your portfolio is also daunting. If you are still in doubt about which portfolio to choose, we suggest you read our article How To Invest Money: 5 Simple Steps That Work For Anyone

If you have already committed to a portfolio – good for you! If you need help maintaining the portfolio you will find our rebalance worksheet useful. Rebalancing your portfolio lowers your risk and may even provide higher returns in the long run.

You can find the rebalance worksheet in our article Here Is The Most Easy To Use Portfolio Rebalance Tool

Conclusion

I tried to curtail my writing for this article. I could write a lot of pages on Bogle. He remains one of my absolute heroes and hallmark of investing wisdom and life wisdom!

Bogle’s investing recommendation is straight forward.

Do you own any Vanguard funds?

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