馃攳
Vanguard Founder Jack Bogle's '90s Interview Shows His Investing Philosophy - YouTube
Channel: CNBC
[0]
They were bearish when they should have been bullish and bullish when they should have
[3]
been bearish. So the index at least steers a steady course.
[15]
We're joined this evening by a mutual fund
[16]
executive whose words are so clear they
[19]
never need dissection or analysis. He's John
[21]
C. Bogle, founder- founder and senior chairman
[24]
of the Vanguard Group the nation's second
[26]
largest fund company. And he joins us
[28]
tonight tonight from Philadelphia. Welcome Jack.
[30]
Thank you, Tyler. Nice to have you here.
[33]
Always good to be with you. Great. You know your index 500 portfolio now the second
[36]
largest fund in America has 55 billion dollars or thereabouts in it as of the end
[42]
of last month. Do you worry that so many investors who have put so much money into
[47]
that fund over the past few years are going to be disappointed, not when that fund does
[53]
you know doesn't perform as well but, when
[55]
some other index fund that you own starts to be the one that everybody wants to be in?
[59]
I worry about it a good bit. People should take an index fund for what it is, Tyler.
[64]
This is a large cap oriented fund. There will be a time when small cap and mid-cap
[69]
funds will do better than large cap stocks but it's not here now. And to my delight,
[74]
it wasn't here and the decline the index fund gave a wonderful account of itself when
[78]
the market went down mid July to the end of August.
[82]
Hey Mr. B. Bill Griffith here as well. Hi
[84]
Bill. What about the big picture though? I
[87]
mean you more than anybody probably in the mutual fund industry have been a proponent
[90]
early on of index mutual funds and people
[94]
lately have been buying into them but what about the concept that if we see a market
[98]
continue to decline that people will be disappointed in all index funds because they
[103]
find that the managers are not allowed to sell to get out of the market?
[107]
Well the fact of the matter is that the index fund has traditionally carried about 20
[111]
percent less risk than the average fund. In other words for all the vaunted ability of
[117]
mutual fund managers to raise cash they've
[119]
really been doing just the opposite. They had 14 percent in cash at the beginning of
[123]
of this bull market and 4 percent only 4
[126]
percent at the peak. They were bearish when they should have been bullish and bullish
[131]
when they should have been bearish. So the index at least steers a steady course.
[136]
Do you still expect Mr. Bogle that if this becomes what people call a stock pickers
[141]
market that the index funds will continue to outperform the stock pickers?
[145]
I don't think there's such a thing as a stock
[148]
pickers market. All investors are picking all stocks and to the extent an index fund
[154]
owns all stocks. It's a sort of contradiction in terms. Because if the good
[158]
stock pickers take all the good stocks the other half of the market will be owned by
[162]
the bad stock pickers who pick the bad stocks. It all comes out to a sum of one.
[168]
You know we were talking last week on the program about a mutual fund fees how most
[172]
people are happy to pay them when the market is going up because they're still making
[175]
money. But as the market comes down and especially as the net asset value of a
[179]
mutual fund comes down people maybe start to pay more attention to those fees something
[184]
that I know is very near and dear to your heart.
[186]
Yeah the fees in the mutual fund industry, I'm sorry to say, are generally pretty outrageous
[191]
and you add to an average fee of one and a half percent, at least, another half percent
[196]
for the fund transaction costs inside the portfolio, which isn't disclosed separately
[201]
and then mutual funds are tremendously except for index funds really tremendously
[205]
tax inefficient and the index fund is going to pick up another point and a half
[210]
On tax efficiency. You think they're going to have to come down though because of
[213]
competitive practices and because maybe fund investors will demand it.
[217]
I think sooner or later fund investors will
[220]
see the light. You see more attention paid to cost in the press. You see more
[225]
dissatisfaction with the mutual fund as an investment medium in the magazines and on
[230]
television. And I think the industry has got to adjust to a different era. The fees are
[236]
too high and that's that's all there is to that.
[239]
In addition to fees being, your word outrageous, a lot of people think that there
[245]
are just plain too many mutual funds out there. Some 9000. What's your view on that?
[249]
And I note that you guys have something like twenty two or more separate index portfolios
[255]
just in the equity area. Why do you need that many?
[258]
Well you need a first. I think there are far
[260]
too many funds in the industry. I mean I don't know what one does with 9000 funds.
[265]
Now of course I can immediately jump to our own defense which maybe a little bit unfair
[269]
but you need a number of index funds because investors are getting more specialized. And
[274]
some investors want the 500. My preferred index fund happens to be a total stock
[278]
market which includes large, medium and small stocks. But some investors with it with a
[283]
blue chip portfolio want an aggressive entry
[286]
into say a small cap growth funds or a small cap growth index fund. Isn't it a very
[293]
intelligent way to do that. So to a point we ought to meet public demand. We shouldn't be
[299]
creating. We as a company or we as an industry. Mutual funds whose only reason for
[305]
being is to appeal to a marketing need that is unsound. We ought to be spending more
[309]
time in this business on investing and less time on marketing.
Most Recent Videos:
You can go back to the homepage right here: Homepage