In Memoriam: John B. Neff, CFA
“When you feel like bragging, it’s probably time to sell.” — John B. Neff, CFA
The investment world lost another legend in 2019.
John B. Neff, CFA, who alongside his long-time friend and tennis partner, the late John C. Bogle, helped build Vanguard Group into a pillar of global investing, passed away last week after a long illness. He was 87.
His legacy will be an enduring one.
As a managing partner at Wellington Management, Neff ran the Vanguard Windsor Fund from 1964 until his retirement in 1995. During that time, he averaged a 13.7% annual return at the fund, which outperformed the S&P 500 in 23 of those 31 years. Neff grew the fund from $75 million in assets under management (AUM) to $13.6 billion.
As Bogle himself observed, “It would be impossible to overestimate John’s importance to Vanguard’s survival in the early years.”
Of course, a paradox of sorts underlied the Bogle-Neff partnership. While Vanguard championed low-cost index funds and was skeptical of any manager’s ability to continually outperform, Neff was an active manager and stock-picker. He favored a low price-to-earnings strategy and sought out undervalued diamonds in the rough. He may have been the exception that proved the rule.
“It’s not always easy to do what’s not popular, but that’s where you make your money,” he explained. “I look for solid fundamentals, a beat-up chart and a good price.”
But Neff stood out for more than just his returns. In an industry where humility and reticence are often in short supply, he had both in abundance. Though one of the greatest investors of his era, he never lost his Midwestern modesty and embraced a simple, plain-spoken approach to investing. “Play to your strengths. Know your good plays and your not-so-great ones,” he said. “Develop a curbstone opinion. Shop around the neighborhood, and ask family and friends about companies to get their perspective.”
Neff’s commitment to service and civic duty was as integral to who he was as stellar returns were to his investment portfolio. He was not an alum, but he volunteered to run the University of Pennsylvania’s endowment. From 1980 until he stepped down 18 years later, the endowment grew from $200 million to $3 billion.
With his commitment to ethics and service, Neff was a big believer in CFA Institute. He was a long-time member of CFA Society Philadelphia and served as president from 1971 to 1972. He became the inaugural chair of the CFA Centre for Financial Market Integrity and earned the Award for Professional Excellence, the highest honor CFA Institute bestows, a fitting tribute to the integrity he brought to the industry.
As Paul Smith, CFA, president and CEO of CFA Institute, observed at the 72nd CFA Institute Annual Conference, “The more things change, the more they stay the same: Professionalism, purpose, client service, ethics. These elements of our lives will never be disrupted — they are timeless.”
Throughout his life and career, Neff exemplified these values. The example he set, like Bogle’s, will inspire investment professionals for some time to come.
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All posts are the opinion of the author. As such, they should not be construed as investment advice, nor do the opinions expressed necessarily reflect the views of CFA Institute or the author’s employer.
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John and his wife, Lillian, were generous in their support of their alma mater, the University of Toledo. Among other things, they sponsored a trading room, Endowed a Chair in Finance, and named the Finance Department.
John was generous with his time as well. When the Finance Department started a student managed portfolio, John would come in person to speak with them, he often joined them electronically when the students presented research.
John and Lillian’s gifts to the University of Toledo were truly transformational.