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Among the trailblazers who made finance more accessible to the masses starting in the 1970s — John Bogle of Vanguard with his index fund, Charles Schwab with his discount brokerage and Louis Rukeyser with his weekly interrogation of one Wall Street sage or another — Edward C. Johnson III, the longtime leader of Fidelity Investments, was the least well known yet arguably the most important.
The others were all public figures, but Mr. Johnson, who died last week at the age of 91, was a Boston patrician with a patrician’s aversion to the spotlight. Despite his upper-class background, he is credited with helping to change the way the middle class thought about its money, transforming Americans from savers to investors. That’s why he matters.
Mr. Johnson, widely known as Ned, was 42 when he took over Fidelity, a small mutual fund company his father had run for three decades. The year was 1972: The market was in the doldrums, inflation was on the rise and Fidelity’s assets were in decline.
Like other financial executives, Johnson realized that a new investment vehicle recently approved by the Securities and Exchange Commission might offer a way to attract more money. This vehicle was called a money market fund; by investing in ultrasafe bonds, it could generate returns that matched real-world interest rates. At a time when bank interest was regulated — fixed by law at 5.25 percent — these higher-yielding funds were sold as an alternative to savings accounts.
They were not, however, consumer friendly. While it was easy to move money in and out of a bank account, it often took weeks to redeem money market fund shares, requiring onerous paperwork. That was a turnoff to people who were used to having easy access to their…
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