Stay the Course by John C. Bogle

Author:John C. Bogle
Language: eng
Format: epub
ISBN: 9781119404316
Publisher: Wiley
Published: 2018-10-23T00:00:00+00:00

Challenges to the Index Fund

Just three index fund managers – Vanguard, BlackRock, and State Street – are responsible for 80% of all index mutual fund assets. Their low fees are the result of competition among these firms. That puts downward pressure on the fees charged by other large mutual fund firms. Given the 2018 introduction of Fidelity’s “zero cost” index funds, fees can hardly fall much further. The concentration of stock holdings among such a small number of managers will raise issues about control of large corporations, competition, and fiduciary duty. Our government will surely be paying attention. (In Part III, “The Future of Investment Management,” I’ll discuss this issue in greater depth.)

Past experience tells us that, during market declines, the S&P 500 Index Fund has fallen in about the same dimension as the average mutual fund. Given that net cash flow into index funds has been unprecedented in recent years – largely at market valuations close to record highs – it may turn out that index investors will overreact during the inevitable next bear market, selling their shares near market lows after buying them near market highs.

Especially during those times of uncertainty, I encouraged investors to “stay the course.” During Vanguard’s long history, that advice has worked magnificently. But in the stock market, the past is not prologue, and only time will tell if investors will continue to heed that advice in the years ahead.

Download

Copyright Disclaimer:
This site does not store any files on its server. We only index and link to content provided by other sites. Please contact the content providers to delete copyright contents if any and email us, we'll remove relevant links or contents immediately.