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Bogle Dead, Vanguard Will Lose Its Way

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    Bogle Dead, Vanguard Will Lose Its Way

    I'm going to go out on a limb and make a prediction here, in the next 10 to 20 years Vanguard will increasingly depart from its traditional indexing, low cost, ultra value model into more speculative and actively managed offerings.

    Founders often have a huge impact on company policy and when they die the mission, character and values of a company can change.

    My mom subscribes to a Vanguard related investing newsletter, The Independent Advisor For Vanguard Investors, which has an interesting passage in their latest.:

    Hello, this is Dan Wiener with the FFSA Vanguard Hotline for Thursday, March 7.

    There are no changes recommended for any of our Model Portfolios.

    Just as Vanguard jumped on the “factor” train with its low-cost factor ETFs a year ago, it’s now going whole-hog into the ESG marketplace with an actively-managed option, Global ESG Select Stock, to complement its ESG International Stock (VSGX) and ESG U.S. Stock (ESGV) ETFs as well as the now-ancient Social Index (VFTSX) which, in its almost 19 years has only attracted $4.8 billion in assets. (By contrast, Inflation-Protected Securities (VIPSX)—which launched just one month after Social Index—now holds $27 billion in assets.)

    The new active ESG fund has low costs, which is a plus, and it’s going to have a concentrated portfolio, holding about 40 stocks, which is another plus in my eyes.

    One big change: Vanguard is ceding all proxy voting to the managers rather than doing so itself. That’s great marketing of course and gets Vanguard off the hook. It will be for someone other than me to compare Vanguard’s voting and Wellington’s voting records on the same companies in the years to come.
    So what this means is that Vanguard is increasingly putting resources into actively managed funds with control by fund managers, which is the exact opposite of Bogle's vision of ownership by fund shareholders and deemphasis of active management.

    John Bogle, dead indeed.
    [email protected]
    202.468.6043

    #2
    Disagree. Just other options. All the other firms are trending to low costs (i.e. Fidelity zero funds).

    I dare you to post that on Bogleheads

    Comment


      #3
      Originally posted by Jluke View Post
      Disagree. Just other options. All the other firms are trending to low costs (i.e. Fidelity zero funds).

      I dare you to post that on Bogleheads
      I would...I don't have a bogleheads account.
      [email protected]
      202.468.6043

      Comment


        #4
        Already been discussed on bogleheads. John Bogle has not been associated with running Vanguard for decades.

        Comment


          #5
          Originally posted by corn18 View Post
          Already been discussed on bogleheads. John Bogle has not been associated with running Vanguard for decades.
          er...kinda...from what I gather, he had an office at the business.
          [email protected]
          202.468.6043

          Comment


            #6
            Originally posted by james.hendrickson View Post

            er...kinda...from what I gather, he had an office at the business.
            he hasn't been directing anything to do with Vanguard funds for many years. You can relax. His office was used for getting out of the house and sipping on some whiskey with a daily geritol caplet, occasionally supplemented by a donut.
            How can you have any pudding if you don't eat your meat?

            Comment


              #7
              Last served at Vanguard in 1999

              Comment


                #8
                My vanguard roth IRA will keep rockin'
                Gunga galunga...gunga -- gunga galunga.

                Comment


                  #9
                  Greenskeeper - thats precisely the concern. With the shift to active investing, returns may go down.
                  [email protected]
                  202.468.6043

                  Comment


                    #10
                    Originally posted by james.hendrickson View Post
                    Greenskeeper - thats precisely the concern. With the shift to active investing, returns may go down.
                    You can choose index or active. I doubt VG will abandon low cost index funds but if they do, the revolution has already happened. Just switch to FIDO for no cost indexing. I see nothing here that impacts a low cost investor. Other than I may have to call myself a fidohead vs. a boglehead. Actually, I am a fidohead because all my investments are with FIDO.

                    Comment


                      #11
                      Originally posted by james.hendrickson View Post
                      Greenskeeper - thats precisely the concern. With the shift to active investing, returns may go down.
                      I have no concern at all that Vanguard will stop offering their index funds. If they want to add some active funds, that will not affect me or my returns in any way. The performance of the indexes isn’t going to change.
                      Steve

                      * Despite the high cost of living, it remains very popular.
                      * Why should I pay for my daughter's education when she already knows everything?
                      * There are no shortcuts to anywhere worth going.

                      Comment


                        #12
                        Originally posted by james.hendrickson View Post
                        Greenskeeper - thats precisely the concern. With the shift to active investing, returns may go down.
                        You do realize that the most famous vanguard funds Wellington and Wellesley are actively managed?

                        they have been around a very long time.

                        Comment


                          #13
                          Incidentally, James, I don't see anything in the quote you posted suggesting that Vanguard is abandoning their index funds. Where are you even getting that idea from?

                          The fact that the Social Index fund has floundered is no fault of Vanguard's. The whole "social investing" thing was a stupid idea from day one.
                          Steve

                          * Despite the high cost of living, it remains very popular.
                          * Why should I pay for my daughter's education when she already knows everything?
                          * There are no shortcuts to anywhere worth going.

                          Comment


                            #14
                            Originally posted by corn18 View Post
                            I may have to call myself a fidohead vs. a boglehead. Actually, I am a fidohead because all my investments are with FIDO.
                            You're a boglehead because you believe in the principles espoused by Bogle, not because you invest with Vanguard.
                            Steve

                            * Despite the high cost of living, it remains very popular.
                            * Why should I pay for my daughter's education when she already knows everything?
                            * There are no shortcuts to anywhere worth going.

                            Comment


                              #15
                              Originally posted by disneysteve View Post
                              The whole "social investing" thing was a stupid idea from day one.
                              LOL so true.

                              Isn't it funny how society is like a giant herd of cattle running this way and that, chasing the latest and greatest idea, and acting all enlightened and responsible in the process?

                              - For years, we've been hearing about how solar is the ultimate in clean energy. Now we are finding out that those darn panels pose a real hazard environmentally when they are all used up (and that doesn't take very long) and have to be disposed of somewhere.

                              - Supposedly the electric car is the ultimate green transportation, until we realized that the electricity doesn't come from the outlet, but rather from the local coal plant. And as it turns out, it's far dirtier to generate enough power to charge your electric car for 40 miles than burning a whole tank of gas that might take you 400 miles.

                              You can count on government to come up with the most absurd ideas and create policy around them. Cash-for-Clunkers might be the all-time bellwether for utter stupidity. I mean it's so stupid that if you wrote a fiction novel about it no one would read it because it wouldn't be plausible.

                              Last edited by disneysteve; 03-09-2019, 05:10 AM.
                              How can you have any pudding if you don't eat your meat?

                              Comment

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