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Wells Fargo executive pioneered techniques for lowering costs and allocating assets
In 1969, it was heresy. William Fouse, a research manager at Mellon National Bank & Trust Co., was telling the professionals who selected stocks for the bank’s investment funds they didn’t know what they were doing.
Instead of studying balance sheets and quizzing corporate executives in an effort to pick winners, Mr. Fouse argued, the bank should create a fund that would match the performance of the overall stock market. After his horrified bosses dismissed that idea, Mr. Fouse grabbed an opportunity to join Wells Fargo Bank WFC, -1.50% in San Francisco.
There he joined a small band of mavericks who in the early 1970s created the first index funds for institutional investors. Mr. Fouse proved adept at explaining the concept to skeptical pension funds and other customers. He was relentless and, as he put it, messianic.
So was Jack Bogle, founder of Vanguard Group, which launched the first index mutual fund, for individual investors, in 1976. Mr. Bogle brought indexing to the masses. Since then, it has gone mainstream. Funds tracking broad U.S. equity indexes had $4.37 trillion in assets as of Sept. 30, according to Morningstar Inc. Funds whose managers try to beat the market had $4.28 trillion.
Mr. Bogle died in January. Mr. Fouse died Oct. 17 at the age of 91.
A copy of this report appears at WSJ.com
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