For fans of indexing in general and Vanguard funds specifically, it's a big week for their favorite market gurus, the Bogle clan.
Jack Bogle, Vanguard's founder, defines capitalism for NetNet:
The only way I can define capitalism right now is casinoism!
The rampant trading that goes on is just foolish and creates no value for both the buyer and seller combined. We have this casino mentality. Its a rapid turn over.
It's a good interview with plenty of expected Bogle nuggets (buy-and-hold is alive and well, although the market is still very much an ailing patient).
Read the rest at NetNet.
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Meanwhile, next-gen Bogle (that's John C. Jr.), gets personal in the WSJ (sub. req.) with fellow fund giant Neil Hennessy over that most Vanguard-ian of mutual fund themes: Fees.
Mr. Hennessy blames the intermediaries he has hand-selected for high shareholder expenses. Yet he continues to employ them.
His complaint about rising registration, legal and audit fees is also a canard. He makes his argument by citing 10-year percentage increases in fees that even for my small institutional-investment business comprise a de minimis amount of expenses.
If Mr. Hennessy wants to deflect the causes of higher fund fees from the fund industry or himself, he should at least take the initiative to try to lower his funds' shareholders' fees. And Mr. Bogle is right, the mutual fund industry overall should do the same.
Intermediaries! Canard! Good times. The full letter is here.
[Use ETFs as a yardstick to measure mutual fund's returns (and expenses).]
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