Welcome to DU!
The truly grassroots left-of-center political community where regular people, not algorithms, drive the discussions and set the standards.
Join the community:
Create a free account
Support DU (and get rid of ads!):
Become a Star Member
Latest Breaking News
General Discussion
The DU Lounge
All Forums
Issue Forums
Culture Forums
Alliance Forums
Region Forums
Support Forums
Help & Search
Bogle Sounds a Warning on Index Funds
From https://www.wsj.com/articles/bogle-sounds-a-warning-on-index-funds-1543504551
Bogle Sounds a Warning on Index Funds
The father of the index fund says it’s probably only a matter of time before they own half of all U.S. stocks; ‘I do not believe that such concentration would serve the national interest’
Jack Bogle after speaking at the 2018 Bogleheads Conference. The creator of the index fund says their increasing dominance may create some of the ‘major issues of the coming era.’ PHOTO: RYAN COLLERD FOR THE WALL STREET JOURNAL
By John C. Bogle
Nov. 29, 2018 10:15 a.m. ET
There no longer can be any doubt that the creation of the first index mutual fund was the most successful innovation—especially for investors—in modern financial history. The question we need to ask ourselves now is: What happens if it becomes too successful for its own good?
The First Index Investment Trust, which tracks the returns of the S&P 500 and is now known as the Vanguard 500 Index Fund, was founded on December 31, 1975. It was the first “product,” as it were, of a new mutual fund manager, The Vanguard Group, the company I had founded only one year earlier.
The fund’s August 1976 initial public offering may have been the worst underwriting in Wall Street history. Despite the leadership of the Street’s four largest retail brokers, the IPO fell far short of its original $250 million target. The initial assets of 500 Index Fund totaled but $11.3 million—falling a mere 95% short of its goal.
...
The father of the index fund says it’s probably only a matter of time before they own half of all U.S. stocks; ‘I do not believe that such concentration would serve the national interest’
Jack Bogle after speaking at the 2018 Bogleheads Conference. The creator of the index fund says their increasing dominance may create some of the ‘major issues of the coming era.’ PHOTO: RYAN COLLERD FOR THE WALL STREET JOURNAL
By John C. Bogle
Nov. 29, 2018 10:15 a.m. ET
There no longer can be any doubt that the creation of the first index mutual fund was the most successful innovation—especially for investors—in modern financial history. The question we need to ask ourselves now is: What happens if it becomes too successful for its own good?
The First Index Investment Trust, which tracks the returns of the S&P 500 and is now known as the Vanguard 500 Index Fund, was founded on December 31, 1975. It was the first “product,” as it were, of a new mutual fund manager, The Vanguard Group, the company I had founded only one year earlier.
The fund’s August 1976 initial public offering may have been the worst underwriting in Wall Street history. Despite the leadership of the Street’s four largest retail brokers, the IPO fell far short of its original $250 million target. The initial assets of 500 Index Fund totaled but $11.3 million—falling a mere 95% short of its goal.
...
