Eventually, the great body of investors found themselves in agreement with Bogle. On the strength of its index funds, Vanguard became the nation’s largest mutual fund complex with more than $5 trillion under management. (That’s right, trillion.) Was Bogle happy? Alas, he was not.
As he saw it, far too much of the popularity of index funds was being driven by exchange traded funds, which allowed investors to quickly get in and out of the market — to time the market. Indeed, turnover in the biggest such funds was over 100 percent in a month. Turnover like that represented everything Bogle despised about the financial services industry.
Last year, when I asked Bogle about ETFs, he told me that Vanguard had been offered the chance to market the first ETF in the early 1990s, when he was still running the company. “I said, ‘No way. That’s not what index funds are for.’ Now you can trade the S&P 500 all day long,” he added. “What kind of nut would do that?”
As recently as November, Bogle was still at it, writing an article in the Wall Street Journal offering a series of idea for how index funds should be reformed.
In the end, although he never put it like this, Bogle understood that investing is hard. Most of us lack not only the time to put into it, but also the fortitude to zig when others are zagging, or to buy when others are selling. That’s why we should have listened to Jack Bogle for all those years when we were jumping on hot stocks — and why we should listen to him still, even though he’s is no longer with us.
This column provided by Bloomberg View.