His insights, however, were not always perfect.
He spent much of his time after that as president of the Bogle Financial Markets Research Center, writing books and spreading the gospel of low-cost investing. It was a double whammy: Vanguard attracted passive investors who simply wanted to invest with the markets, but at a lower cost, and it attracted active investors who were seeking alpha but also wanted in at a lower cost.īogle retired as Vanguard's chairman and CEO in 1996 and its senior chairman in 2000.
From the outset, Vanguard had many actively managed funds, including Vanguard Health Care, run for 30 years by legendary investor Ed Owens.īut even his actively managed funds were cheaper than those of competitors. That, essentially, is all you need to know to understand why index funds must provide superior long-term returns."ĭespite his love for indexing, Bogle was never against active management. "Unlike actively managed funds, an index fund pays no advisory fees and limits portfolio turnover, thus holding these costs to minimal levels. "Investors as a group must underperform the market, because the costs of participation - largely operating expenses, advisory fees, and portfolio transaction costs - constitute a direct deduction from the market's return," he wrote. In that same 1997 paper, Bogle outlined the essential theory of why the high fees charged by active managers were the enemy of long-term investing. Personal Loans for 670 Credit Score or Lower Personal Loans for 580 Credit Score or Lower Best Debt Consolidation Loans for Bad Credit
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