NEW YORK -- John C. Bogle, founder of Vanguard Group, the nation's second-largest mutual fund company, said yesterday he plans to resign as chief executive.
Mr. Bogle, 66, will be succeeded Jan. 31 by his chief lieutenant, John J. Brennan, pending board approval. Mr. Bogle will remain as chairman.
"I believe there comes a time when a company's founder simply ought to step back from running the firm and give others a chance," Mr. Bogle said.
Analysts have speculated for more than a year that Mr. Bogle would retire because of concern about his health. Mr. Bogle has suffered several heart attacks, and he is said to be waiting for a heart transplant.
Along with Dreyfus Corp. Chairman Howard Stein and Fidelity Investments Chairman Edward "Ned" Johnson, he is one of the industry's leaders. Vanguard is the second-largest fund company, after Fidelity, and oversees more than $150 billion in assets and about 88 funds.
"This resignation represents an end of an era," said James Riepe, managing director at T. Rowe Price Associates Inc. in Baltimore. "Bogle has had as much influence on the industry as has anyone.
"He's always been an advocate of shareholders' interest, and he's been a spokesman for the industry in times of need," Mr. Riepe said.
Mr. Bogle is credited with creating the industry's lowest-cost mutual fund company and has been an outspoken critic of excessive fees and poor management in the industry. People who buy Vanguard funds pay fees that are 50 percent to 80 percent below the industry average, according to Lipper Analytical Services Inc.
His decision to retire comes six months after veteran portfolio manager John B. Neff announced plans to retire at the end of 1995. Mr. Neff was manager of Vanguard's flagship $11.7 billion Windsor Fund.
Mr. Bogle said he nominated Mr. Brennan to be his successor. The company's board will vote on the nomination in January.
Mr. Brennan, 40, joined Vanguard, of Valley Forge, Pa., in July 1982, when he was named assistant to Mr. Bogle. Three years later, he was appointed chief financial officer. He was named to the firm's board in 1987 and elected president in May 1989.
Some analysts have criticized Vanguard for not being as innovative as rival firms in offering new funds. Others say Vanguard has been shrewd over the years about avoiding gimmicky fund concepts.
Last year, Vanguard introduced three funds designed to minimize taxes.
This year, the firm expects to introduce a new global stock fund, along with three other "Horizon" funds to invest in more risky securities than the typical Vanguard fund.
Mr. Bogle founded Vanguard in 1974, the year he was fired by Wellington Management Co.
Mr. Bogle was dismissed after he fired one of the company's directors, a veteran fund manager, and differed over how management fees should be charged.