A Quote by John C. Bogle
My favourite holdings are Vanguard's Wellington Fund, a balanced mutual fund which is a legacy investment from my first career at Wellington Management Co., and the Vanguard 500 Index Fund.
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Vanguard never would have happened if I hadn't been fired as CEO of Wellington Management Company, the firm that did the investing for the Wellington fund and eight sister funds.
The culture of the mutual fund industry, when I came into it in 1951, was pretty much a culture of fiduciary duty and investment, with funds run by investment professionals. The firm I worked with, Wellington Management Co., they had one fund. That was very typical in the industry... investment professionals focused on long-term investing.
I believe Washington should be a more active participant focusing on the issue of why corporate shareholders and mutual fund shareholders are not given fair treatment by corporate management and mutual fund management. We need to develop a national standard of fiduciary duty to ensure that these agents, if you will, are adequately representing the principles - pension beneficiaries and mutual fund shareholders - whom they are duty bound to serve.
As a portfolio manager, when do you start advising to your clients that they have some cryptocurrency exposure? When will there be an index fund, a mutual fund of cryptocurrencies? It will happen.
Experience conclusively shows that index-fund buyers are likely to obtain results exceeding those of the typical fund manager, whose large advisory fees and substantial portfolio turnover tend to reduce investment yields. Many people will find the guarantee of playing the stock-market game at par every round a very attractive one. The index fund is a sensible, serviceable method for obtaining the market's rate of return with absolutely no effort and minimal expense.
A minuscule 4 percent of funds produce market-beating after-tax results with a scant 0.6 percent (annual) margin of gain. The 96 percent of funds that fail to meet or beat the Vanguard 500 Index Fund lose by a wealth-destroying margin of 4.8 percent per annum.
The fund scandals shined the spotlight on the fact that mutual fund managers were putting their interests ahead of the fund shareholders who trusted them, which had much more substantial consequences in the form of excessive fees and the promotion - as the market moved into the stratosphere - of technology funds and new economy funds which were soon to collapse.
Assuming that the future is like the past, you can outperform 80 percent of your fellow investors over the next several decades by investing in an index fund-and doing nothing else. But acquire the discipline to do something even better: become a long-term index fund investor.
Invest in low-turnover, passively managed index funds... and stay away from profit-driven investment management organizations... The mutual fund industry is a colossal failure... resulting from its systematic exploitation of individual investors... as funds extract enormous sums from investors in exchange for providing a shocking disservice... Excessive management fees take their toll, and manager profits dominate fiduciary responsibility.
The biggest secret in venture capital is that the best investment in a successful fund equals or outperforms the entire rest of the fund combined.
Still, I figure we shouldn't' discourage fans of actively managed funds. With all their buying and selling, active investors ensure the market is reasonably efficient. That makes it possible for the rest of us to do the sensible thing, which is to index. Want to join me in this parasitic behavior? To build a well-diversified portfolio, you might stash 70 percent of your stock portfolio into a Wilshire 5000-index fund and the remaining 30 percent in an international-index fund.
An index fund is a fund that simply invests in all of the stocks in a market. So, for example, an index fund might invest in every single stock or almost every single stock in the U.S. market, it might invest in every single stock abroad, or it might invest in all of the bonds that are out there. And you can make a perfectly fine investing portfolio that mixes equal parts of all three of those.
Nothing highlights better the continuing gap between rhetoric and substance in British financial services than the failure of providers here to emulate Jack Bogle's index fund success in the United States. Every professional in the City knows that index funds should be core building blocks in any long-term investor's portfolio. Since 1976, the Vanguard index funds has produced a compound annual return of 12 percent, better than three-quarters of its peer group.
There are a lot worse things you can do with all your bucks than giving them to even a mediocre mutual fund - such as, for example, giving them to a mediocre hedge fund. If supporting the lifestyle of a mediocre fund manager is your favorite charity, who am I to stop you?
In every mutual fund prospectus, in every sales promotional folder, and in every mutual fund advertisement (albeit in print almost too small to read), the following warning appears: "Past performance is no guarantee of future results."
Mutual fund managers are trapped in this rather deadly vicious circle: the more successful they are, the more money flows into their mutual fund. Then, it is more difficult for them to beat the market averages or even to match their own past performance.
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