David Swensen, who pioneered an investing style that helped endowments beat markets by using alternative assets such as private equity and real estate, said at the same conference that investors who don't have access to top managers are best off using index products such as those promoted by Bogle.

"There are two sensible approaches to investing -- either 100 percent active or 100 percent passive," said Swensen, the chief investment officer of Yale University's $19.4 billion endowment. Unless an investor has access to "incredibly high-qualified professionals," they "should be 100 percent passive -- that includes almost all individual investors and most institutional investors," he said.

Excessive Compensation

Bogle has also long criticized what he calls excessive executive compensation and the conflicts of interest that he says most money managers confront in pledging to maximize returns for clients and profits for company shareholders.

Bogle aimed to solve the potential conflict for Vanguard by setting up the company as a cooperative, owned by the funds it managed. The firm doesn't distribute profits. It lowers fees when revenue grows faster than expenses, in effect returning excess proceeds to investors.

"Ordinary investors were for the first time given a fair shake," because of Vanguard's structure, Burton Malkiel, a Princeton economist and Vanguard board member since 1977, said during the conference.

Yale's Swensen said that, by contrast, many other mutual fund firms still "allow profit to trump fiduciary responsibility."

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