Given that John Bogle helped create the first index mutual fund in 1975, it should come as no surprise that he is a huge proponent of index funds. The founder and former chief executive and chairman of Vanguard Group, Inc. argues that even the most successful fund managers are destined to stumble as their funds get bloated and revert to the mean, so why pay extra for what will ultimately turn out to be average performance (or worse).
I just ran across an interview with Bogle in Bottom Line/Personal where he advised:
“I tell investors who are sick of hearing me tout the benefits of index funds that they must, at least, be disciplined. Keep 95% of your portfolio in index funds, and use the rest to pick stocks or actively managed funds.”
Whether or not you agree with the 95/5 split — personally, I do 100% index funds, but others undoubtedly come down more heavily on the actively-managed side of things — it’s still interesting to hear his about his favorite (non-Vanguard, of course) mutual fund families:
Dodge & Cox Funds
The Oakmark Funds
The Royce Funds
The Torray Funds
Tweedy, Browne Co.
The Weitz Funds
Given Bogle’s stature in the investing world, this definitely food for thought. Of course, he didn’t pick specific funds, but the list above is a good jumping off point.
And, as Bogle says:
“Make a 10-year commitment, and don’t bail out if your managed fund underperforms its benchmark index in any given year.”
hello……. would you please provide me with an address where i can write to mr. john bogle? thank you, david garnett
It figures that they’d actually put some useful information in Bottom Line/Personal after I let my subscription run out!
Mutual funds have kicked butt for me. I live in Canada which has an ecomony that’s rising faster than the US right now.
I have Royal Bank mutual funds that have been earning very well for me.
When looking for investments, sometimes it’s wise to look around and look to other countries. While, for me it sucks that Canada is doing so well even though I live here because I earn US dollars, it’s well worth your while to check out some Canadian mutual funds and even some stocks on the TSX (tsx.com).
Looking for rising real estate investments? Look north 🙂
Cheers from Vancouver, British Columbia, Canada
I have to admit–I’m still on the fence about index funds. Do they really outperform luminaries like Bill Miller, Dan Fuss, and Bill Gross?
My quant-nature likes the efficient market hypothesis. But come on–we’re talking about people here. People make all kinds of bad decisions (perhaps especially about investing); shouldn’t that be an arbitrage opportunity?
WOW, Nickel…That is exactly what I needed & I really thank you. Just think; you may be the reason for one of the biggest positive changes in our lives. Much appreciated!
Carole: Go to personal.vanguard.com and click and click “Go to the site” about halfway down the page on the left side. This takes you to their main web page for individual investors, where you’ll find tons of information. Along the top, there are links for opening accounts online, downloading forms that you can fill out and send in, and also for contact information. If you’re more comfortable speaking to someone, you might consider calling Vanguard Investor and Client Information at 877-662-7447 (that’s 877-662-SHIP if you spell it out). You’ll of course need to decide what type of account to open (Traditional IRA vs. Roth IRA vs. regular account), what sort of index fund(s) you want given your investment goals and time horizon, etc. But this should get you started.
OK; I know we’re way behind all you guys, however here’s a start….Husband 56, I’m 63 & we have no retirement preparation! So; how do you open an index fund at Vanguard? I just saved up the $3000 opening amt & can send my SS ck amt ea month ($800). Obviously it took a long time to get to this point & really need help getting the nerve to just do it! Any help is appreciated. Carole