A Quote by John C. Bogle
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.
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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.
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.
By periodically investing in an index fund, the know-nothing investors can actually outperform most investment professionals.
We need a mutual fund industry with both vision and values; a vision of fiduciary duty and shareholder service, and values rooted in the proven principles of long-term investing and of trusteeship that demands integrity in serving our clients.
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.
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.
The illusion of skill is not only an individual aberration; it is deeply ingrained in the culture of the [investment management] industry.
We have already significant sums of money in our petroleum fund, a fund created by law that includes all the revenues received from the Timor Sea, and invests in conservative, safe, long-term investment portfolios - right now in US Treasury Bonds.
If you don't like the idea that most of the money spent on lottery tickets supports government programs, you should know that most of the earnings from mutual funds support investment advisors' and mutual fund managers' retirement.
We're just very much a plain-vanilla, long-only investment fund.
Millions of mutual-fund investors sleep well at night, serene in the belief that superior outcomes result from pooling funds with like-minded investors and engaging high-quality investment managers to provide professional insight. The conventional wisdom ends up hopelessly unwise, as evidence shows an overwhelming rate of failure by mutual funds to deliver on promises.
The general systems of money management today require people to pretend to do something they can't do and like something they don't. It's a funny business because on a net basis, the whole investment management business together gives no value added to all buyers combined. That's the way it has to work. Mutual funds charge two percent per year and then brokers switch people between funds, costing another three to four percentage points. The poor guy in the general public is getting a terrible product from the professionals.
I think you'll do as well as most professionals. Most professionals don't beat the market. Let's not over-rate my industry. But if you have time, you can be in good mutual funds that have good records.
There is no question that an important service is provided to investors by investment companies, investment advisors, trust departments, etc. This service revolves around the attainment of adequate diversification, the preservation of a long-term outlook, the ease of handling investment decisions and mechanics, and most importantly, the avoidance of the patently inferior investment techniques which seem to entice some individuals.
The story started over a decade ago when I ran Hermitage Capital Management, the largest investment firm in Russia. I was very successful, but when I started to complain publicly about corruption at the companies in which my fund invested, President Vladimir Putin had me expelled from the country and declared a threat to national security.
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.
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