Vanguard founder Jack Bogle has some advice for active managers: “Do nothing, just stand there.”

Addressing the 2017 Morningstar Investment Conference in Chicago on Thursday, Bogle took the mutual fund industry to task for short-sightedness and rampant conflicts of interest, but he also said that most of the traditional large fund complexes will survive the continuous shift to passive, index-following strategies.

“These large firms also have the resources to pursue other lines of business beyond investment management, although I don’t see how that strategy could create value for their mutual fund shareholders,” said Bogle.

Doing nothing, said Bogle, is more likely to benefit active managers than attempting to follow index funds toward lower fees, marketing more aggressively or launching their own index-fund lineups.

Bogle was also pessimistic that active managers could find success through offering their strategies within ETFs and “dubious” of the long-term staying power of smart beta products -- instead, major mutual fund conglomerates should keep their hands off the mutual fund business, says Bogle, and expand into other business lines to ensure their sustainability as going concerns.

“Maintain your fund business as the ‘cash cow’ that it is today, delivering high margins and generous profits, albeit likely at a declining rate,” said Bogle. “Don’t invest more capital. Don’t cut management fees. Nominal cuts won’t help, and severe cuts would eliminate those cash flows. While fund cash outflows are highly likely to continue, a sharply rising stock market, however unlikely, would help offset the outflows, slowing the declines in assets under management, fee revenues and profits.”

Although a “do nothing” strategy may serve mutual fund companies and their public ownership well, Bogle noted, it literally does nothing for the investors who hold assets within their funds.

“I understand that all enterprises face conflicts of one kind or another, and balancing business values with fiduciary values is no easy task,” said Bogle. “Even at the only firm in which the fund shareholders own the management company [Vanguard], conflicts exist, but it is my deeply-held opinion that the flawed structure of this industry has created deep fissures that will, ultimately have to be closed.”

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