Fifty years ago this January, an economist named Burton Malkiel published a book calling for an innovation on behalf of the small investor. “What we need,” he wrote, “is a no-load, minimum-management-fee mutual fund that simply buys the hundreds of stocks making up the broad stock-market averages and does no trading from security to security in an attempt to catch the winners.”Hard as it may be to believe, index investments weren’t readily available to the average saver in those days. But Dr. Malkiel was convinced that active management couldn’t consistently beat passive index investing. And in 1976 Vanguard came out with just the kind of fund he advocated. Today the sum of indexed assets is now in the trillions, and index funds, he reports, “account for more than 40% of the total invested in mutual funds and ETFs.”

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