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Vanguard Group founder on the problem with index funds

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Vanguard Group Founder Jack Bogle discusses how the indexing business has changed over the years and the problem with index funds.
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Ronald Picker (5 hours ago)
Given the lower expense charge a buyer pays for an S&P index ETF, as compared to a bit higher management charge a buyer pays for the identical index MUTUAL fund S&P fund, I'd like to know the following: We know the index ETF trades more than a traditional index MUTUAL fund. Jack alluded to that. This creates more short term and long term capital gains with the ETF, relative to the traditional mutual fund. And that theoretically generates MORE long term and short term capital gains which investors must pay taxes on, at year end with the ETF vs. the mutual fund Does the lower ETF management fee relative to the mutual fund management fee more than compensate for the greater amount of taxes you will have to pay, assuming you own the ETF vs, the mutual fund? Anyone with experience owning both?
Mike (12 hours ago)
By far the most misleading title I've ever seen.
Lord of the Jungle (12 hours ago)
It's all about the fees
Kapil Chhabria (13 hours ago)
5:10 that’s Bogel speak for ‘shut your damn mouth you blowhard’
Kapil Chhabria (13 hours ago)
Haha the title of the video really ought to be ‘the problem with index fund for money grubbing, unnecessary, intermidatory financial managers..’
Isn't the ETF version of an index fund WORSE than the normal version of an index fund, because you have to pay "the spread" when you buy, and you also lose "the spread" when you sell? This evidently doesn't happen in normal index funds. I also think normal index funds are "no load" as in NO sales commission, whereas you have to pay a commission when you both buy and sell an ETF. So I don't understand why people ever choose to buy the ETF version. Yes, you can buy and sell ETFs on a moment's notice, but you can buy and sell at the end of every single day with a standard index fund, and that seems to be more than enough for virtually every occasion.
Tempest Sanguine (9 hours ago)
Classical Liberal Warrior ETFs are more tax efficient. They're better in taxable brokerage accounts. Mutual funds are made for retirement accounts.
US "household wealth" is $100 trillion? That seems WAY off! Divided by a US population of 325 million, that works out to about $308,000 per person! So the typical American family of 4 has a net worth of over 1.2 million bucks?! I think it's maybe only a half or a third of that.
Ray Anderson (14 hours ago)
The title of this clip is way off. The Vanguard founder in no way says there is a problem with index funds. Warren Buffett and his side-kick, Charlie Munger, say for the "no nothing investor," the S&P 500 index fund is the way to go. 70% of all mutual funds don't beat the S&P 500. Why don't more people do this? Buffett says it's because it's too easy.
Ravikiran R (19 hours ago)
So wtf is the problem with index funds ? Click bait title..waste of time
K S (21 hours ago)
I listened to a podcast with Jack Bogle last year about index funds, and had never really heard of the concept. I was intrigued and absolutely loved listening to this man talk. I started doing research and sucking up information on index funds. Earlier this year I finally pulled the trigger and switched my 401K account over to a diversified portfolio of Large Cap, Mid Cap, Small Cap, International, and Emerging markets index funds. I have really enjoyed paying more attention to my retirement accounts and they have been doing great.
Adam Millerchip (1 day ago)
The problem with index funds: 4:08. This video could have been 5 seconds long xD
Ben Sanderson (1 day ago)
this is the man. I'm with vanguard, and yes - index funds. dollar cost averaging. rule of 72.
Phillip Hartman (1 day ago)
The problem is index funds is the huge effect being on the list or not being on the list has on the stock's value. If a company makes its way onto the S&P 500, it's stock price will jump. Fall off the list, and it'll tumble. Even if there's no sound reason behind it. It also favors companies currently on the list. However, straight up owning raw shares or ETF index funds is really the only game in town now. Mutual funds? They're just index funds bundled up and sold with a higher MER.
Phillip Hartman (8 hours ago)
Right now I'm reading this book, "How to tell Seth Girorgianni's Mom I love her". It's good stuff. I'm just tired of being a one-night stand. I'm ready to be a dad too.
Padraic Meehan (1 day ago)
Disliked for the clickbait title
Chris Mirra (1 day ago)
why is there a picture of a prison behind him lol
Steven L (1 day ago)
This also explains why the Vanguard Group has removed its flagship 500 Index fund (VINIX) from its employees’ 401(k) plan. Not enough fees for Vanguard and too much return for the employees.
Juan Perez (1 day ago)
Trump bull market contributes to household increase in wealth that you Mr T mr T for 2020
Chicago Masters (1 day ago)
You have to believe anyone who is 186 years old.
Chuck Lee (1 day ago)
It’s crazy I see this guy everyday
iTuber012 (1 day ago)
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frodev (1 day ago)
Well watching that was a fracking waste of time.
Dylan Wedel (2 days ago)
Tech stocks are doing 40-50% returns on the year so far. There’s going to be a crash very soon...
Patrick (2 days ago)
Circular logic. Whenever you make it seem like there is only one answer, the answer is always wrong. If a mutual fund outperformed an index fund by a margin greater than annual fees, should you then invest in the index fund ? Fees are only one criteria, you should also look at performance over time in both up and down markets.
domjal (10 hours ago)
Again profit gets shrunken by fees,if the market is up OR down.
Peter Dao (2 days ago)
Eliminate the gap with blockchain
Remigius (2 days ago)
Jack Bogle has no issue problem with Index Funds, this is a clickbait from Fox Business. Title is very misleading!! I did not expect this from Fox.
John Osgood (2 days ago)
Misleading title, no problem with index funds
thevoxdeus (2 days ago)
It's nice on occasion when you see some one in the financial industry speak the plain truth.
Lex Nuss (2 days ago)
Maria is golden. Vanguard did me well.
Shamindra De Zylva (2 days ago)
Bob Van Wagner (2 days ago)
Index funds make markets stupid when they are too big a share of the market, whether ETF or not. Greed is not a great character trait, sure. But Index funds do not NOW add counter greed forces even when they drive prices down. In fact, entrepreneurship is DRIVEN by a controlled greed. It's not quite as the fictional Gordon Gecko said "Greed is Good", but yes greed is a necessity to a good outcome of a ecomony and a society, in moderation, and in balance against other forces, even darker forces. It has to be controlled, and the early roll out decades of of the Index Funds helped control it. But now? Stupidity is the rule. Is it PRIDE MONTH at the Vanguard? THAT social insanity is itself a measure of stupidity.
chongolongos (2 days ago)
Market weight index funds are inherently large cap biased. Good to tilt to small caps.
Mike Palko CPA (2 days ago)
Ummm, 100 trillion?? That has to be incorrect.
Mike Palko CPA (2 days ago)
Ah, yes. You are correct. Thank you for opening my eyes to this obvious truth, Sensei :)
Bryan Couillard (2 days ago)
If you look at only the top 100 richest Americans, according to Forbes, you get well over 1 trillion. There are millions of millionaires. Why is the number 100 trillion so hard to believe?
MrGiggity890 (2 days ago)
David C I’m not questioning the average. I’m questioning the absolute value of 100 trillion.
David C (2 days ago)
That's how the "average" numbers work. If 80% of households have nothing, but the other 20% of households have 500 trillion, then the "average" household has 100 trillion.
220volt74 (2 days ago)
Change the title to "Vanguard Group founder on advantages of index funds"
Mechannel (2 days ago)
89 years old and this man is still sharp as a tack. Amazing.
Wak Job (2 days ago)
Very Soros looking.
Elliott King (2 days ago)
Love Mr. Bogle and anything he has to say. I hope I’m this sharp when I’m his age.
gefilter2112 (2 days ago)
easy on the collagen there honey
troubauk (8 hours ago)
collagens don't really work
Allan Peda (2 days ago)
I am looking at the left side of the screen a lot more than the right side.
Guy Kugel (2 days ago)
This is not Jack Bogle
Wak Job (2 days ago)
Guy Kugel It's George Soros.
Nobert Stanel (2 days ago)
The problem isn't day traders sellin ETF's. The true problem is about - Being in the market at this moment & not beying avere of whats commin. If the Ray Dalio says that the chances for crash are 50 - 70% in the next 24 months, - You better go Liquid & save 30% - 50% of your current portfolio. At least have 30% of it in cash.
Bryan Couillard (2 days ago)
There have so many studies and documentaries done on this subject. Timing the market perfectly makes you rich, fast. So does picking the right numbers in the lottery. In both cases, the math and history says that you're a hell of a lot MORE likely to lose money trying. Get on the index investment roller coaster young, stay on it,and ride it to wealth. If you care so much about active risk management, there's been a study showing maintaining an exact 80/20 Stock/Bond Index ratio gives a TINY advantage over stock only indexing over the course of a lifetime. But again, this has absolutely nothing with trying to time the market.
James B (2 days ago)
Nobert Stanel we’ve been hearing that advice from market timing “experts” for years. Imagine the missed returns if you went cash two years ago
Jesse M (2 days ago)
Has to do with a BUBBLE! Watch as it goes from $100 Trillion to $50 Trillion overnight. Zimbabwe had $100 Quadrillion in paper money lol!!!
George Garner (2 days ago)
I don't own a index fund I have the Wellesley income fund
Preston Thomas (2 days ago)
Jack is a very old man but if you truly watch he has a sharpe intellect and young spirit about him. Gotta appreciate people like this. How do they stay so young and engaged?
pproust (1 day ago)
243wayne1: asinine comment as that’s a paltry sum for what he’s contributed to the world. Ever looked up that cuck Zuck’s networth?
pproust (1 day ago)
Preston Thomas: great genetics, great upbringing, a willingness to take responsibility and work hard, and a sympathy for his fellow man. He is not only an American hero, but he’s revered everywhere in the world. Happy 89th Birthday, Jack, and many, many happy returns.
Marcello Bruno (2 days ago)
Heart transplant...thats how
Matthew Hoopes (2 days ago)
Guy is still on his game. Sharp as ever
243wayne1 (2 days ago)
His net worth of $80 Million Dollars keeps him engaged.
Jonathan Echevarria (2 days ago)
Financially thriving. Physically disastrous. Find some balance people.
eclipseNF (2 days ago)
Vanguard rules
Simon Zhao (2 days ago)
Over time, more than 50% of mutual fund does not outperform index fund.
Murilo Cruz (2 days ago)
Motherfkn mutual funds investing in index funds. These fkers charge like hell then end up investing index. Hilarious.
FineFlu (2 days ago)
He is starting to look like a victim for Sorosis
243wayne1 (2 days ago)
Greg Tomamichel (2 days ago)
Title of the video is very misleading. Jack Bogle clearly remains a very strong advocate of index funds.
Kevin Rathgeber (1 day ago)
Agreed. Seems to be that he has a problem with mutual funds and not index funds.
Crazylalalalala (1 day ago)
Its is misleading but he points out the many financial services are now actively managing index funds which is a problem.
Nobert Stanel (2 days ago)
Absolutely agreed.
Steven Upton (3 days ago)
does nt that mean as prices rise you have to buy more and as prices fall , the drag tends to increase and your selling?
steven padilla (3 days ago)
And his family is mixed up in this underage trafficking with that girl from smallville fame
Evan Bergeron (3 days ago)
Haha the math correction at the end with a very clear explanation. really good interview
Brandon Barber (3 days ago)
Title of the video is way off, he doesn't see a problem with Index Funds. He is the inventor!
Crazylalalalala (1 day ago)
Watch it again (about 3:30), the problem is that the business has changed from passive indexing to active indexing (With higher fees). Financial institution have adopted indexing and are now actively managing different indexes (seems to me that they just trade traditional indexes). I noticed it on my 401k where for some fucking reason my companies 401k manager has put all my money in the least successful and most expensive index funds.
Ca La (1 day ago)
BlackMan614 I think I understand now what you are saying. Essentially, why use a financial advisor, just place your money in index funds. I agree, but most folks are not financially literate enough to understand that, and they get taken advantage of (typically, they never figure out they got screwed). That is well explained in the Financial Gamble I mentioned earlier.
BlackMan614 (1 day ago)
No mix up. As usual, the SEC is behind the curve. With robe-advisors, indexed funds, target date funds... exactly what is the role of a financial advisor? Zero.
Ca La (1 day ago)
BlackMan614 I was making 2 different points. I see how they got mixed up.
BlackMan614 (1 day ago)
"Financial advisors as fiduciaries". With index funds - who needs a financial advisor??
Jack Sprat (3 days ago)
Now factor in that we lost 20% in purchasing power due to inflation, what are your "gains" now?
Thierry Mettler (2 days ago)
Stocks are a very good way to protect against inflation, shall I walk you through how the world works?
David C (2 days ago)
that depends on 20% since when? If we look all the way back to the 1950's we have lost closer to 80% of buying power- unless there are a lot of people with a High School diploma these days that can afford "the basics"of the 50's like 4 kids, a non working spouse, and pay for a car and a house in cash. These days 2 people working with no kids can barely afford 1 single thing on that list, let alone all of them.
BrentTX87 (2 days ago)
Or, cite sources instead of throwing around numbers and dismissing anyone who questions you.
Jack Sprat (2 days ago)
Euphoriate - I don't have time to walk you through how the world works.
Euphoriate (3 days ago)
20%? where the fuck do you live?
Andy Fazliu (3 days ago)
Johns one of the great innovators, who really did it for the average person. However, he failed to answer the question at the end- indexation by definition does not allocate capital in the most efficient way because it cares less what a particular company is doing and just buys everything. I anticipate that when indexation goes from 45% to 80% of assets invested in stocks that there will be incredibly inefficiency that even subpar active managers could take advantage of. It’s simple: indexation only works if there are thousands of savvy active investors making the market efficient by buying cheap and selling expensive. If they were not doing that, there could not be indexation. Remember any investment vehicle that gets the type of love ETFs are getting, are likely to get into bubble territory unless people start thinking critically again.
Pa Foday Jaiteh (4 days ago)
Good point and a smart man. He can be considered a legend but he forgot to point out one of the biggest reason for the raise to $1 trillion which is #INFLATION.
Proud Menendez (4 days ago)
The hyenas (investment bankers, etc.) are so desperate to continue ripping off people they will say anything in an attempt to downplay the strength and effectiveness of index funds. Just buffet them or boggle them if you will and you will be alright.
Simon Bitton (6 days ago)
$SFILX $SWPPX #schwab
Jack Bogle, a true American Hero.... His innovation of  index funds/low cost, give the Average Working Class American  access to the productivity of the Capitalist System...Don't just be another hypnotized consumer(or Complainer)... Be an OWNER of the means of production.
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D LG (2 days ago)
+Franky I couldn't disagree with you more. Why is it that every time I see a comment from a real estate investor crapping all over index investing, they sound like an angry zealot? The idea the real estate is the only asset class where one can make good money is absurd and wrong. My own success with index investing is all the evidence I need. Real estate is the smallest asset class allocation in my portfolio because, while it is a necessary component due to its non-correlation to the broader market, real estate speculators and overly exuberant buyers create real estate bubbles that frequently overvalue that market, which leads to the bubble/burst cycles we constantly see in that market. Yes, there is some of that in the broader stock market for sure, but the overall stock market is far more diversified than real estate alone and, therefore, can generate excellent returns if you choose the right mix of index funds, and it has the added benefit of reducing the investor's overall risk.
D LG (2 days ago)
While I agree that the advent of low cost index investing opened the door to far more people than before it existed, low wages are still a massive barrier to saving/investing for low income workers. Wages in America need to catch up with productivity and profits and then the entry level worker will also be able to participate in the indexing boom.
Franky Baby .. Good that you found your specific areas of expertise.... Diversification (including RIETs and Real Estate Indexed fund) is a safer bet for the average guy..  Also over a 30 year stretch MOST people Will Lose to the casino... It could be no other way, the casino must make it's cut.
Bri I (6 days ago)
I call bullsh!t on American households having 100 trillion dollars in wealth. That comes out to an average of $800,000 per household. All we hear about is lots of people living paycheck to paycheck with no savings. There seems to be a huge disconnect.
Kevin Rathgeber (1 day ago)
There are obviously outliers, which drive that average up, but I would say net worth wise, $800,000 for household is probably correct. Especially considering the baby boomers (a very large portion of our population) are getting into the later phases of their professional careers.
pproust (1 day ago)
Bri I: you’re in serious need of a high school course on statistics...and some common sense.
Crazylalalalala (1 day ago)
It is hard when the cost of living can be has high as 30k a year... Also when has 300k become a thing to work for? For retirement, that number has been 1mil.
Crazylalalalala (1 day ago)
Its called wealth gap. also people with multi million dollar home push that average up. The median household wealth is only 150k for whites. (which is about 10X what it is for blacks).
Isaac Robin (1 day ago)
Dark Magician I'm not in the habit of following link sent by folks flaming me on the internet. So make your case, since you are so well versed in the material.
EasyYog11 (7 days ago)
Thank You Mr. Bogle. Great Interview. could listen to Mr. Bogle and Mr. Buffett all day.
martin stanley (7 days ago)
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Test Channel (8 days ago)
How does this business analyst Maria not know the basics of how a mutual fund works?
Hey, she has a cute face, firm ass, and perky tits. So QUIT yer complainin'! ;-)
243wayne1 (2 days ago)
Oh believe me, she does. She has a net worth of $22 Million.
Marquee Mark (8 days ago)
Trump is destroying the fake Legacy of the failed Obama - nomics, pumping printed money into the hands of greedy Corporation CEO's with bail outs and three time stimulus packages, which tax payers pay for . I'll give credit to obama for creating Government jobs that have crippled States with Trillions of dollars in Democrat policy PENSION FUNDS for those lazy democrat Government workers.. Obama's free stuff here at his yard sale don't attract people anymore, what a relief!! Besides, the National debt clock has went down instead of the exponential curved hockey stick that Obama created for Eight years
888strummer (8 days ago)
I think the best thing to remember from this interview is that Index Funds are great for investors; especially people who have no time to follow individual stocks
bighands69 (2 days ago)
Quality investment is not that hard. But it is good to have a mixture of index and direct investment.
Patrick McVey (8 days ago)
So a low cost ETF index fund still isn’t as good as a low cost mutual index fund?
Angie Jeffrey (1 day ago)
An ETF’s NAV can be based on trading and not the value of the underlying stocks, unlike with a TIF.
Carlton Rudolph (2 days ago)
243wayne1 and
Ian McDowell (2 days ago)
Buying and holding ETF's works- just don't sell in a panic (if anything, buy more). What he doesn't mention is that a lot of ETF's are a lot more targeted (for example, focused on companies engaged in e-commerce) than the traditional index funds he's talking about (like a 500 index). Go to iShares and powershares and check out what they have, good stuff- you just have to do your homework.
243wayne1 (2 days ago)
+Nick- $3K is just the initial buy in. You can actually sell $2,500.00 after your initial $3K buy in if you want to... To answer your question however, yes, you can continue to invest in small increments after your initial buy in if you so desire.
lilsaint91 (2 days ago)
You can buy vanguard funds in Sg directly from Vanguard? I had thought the only way to do it was buying a Vanguard etf through a broker
Richard Goode (8 days ago)
A change to a index fund?
James California (9 days ago)
This man is the Saint of no-load mutual funds 👌``
Guy knows all the twists and turns in his game .very impressive.
Larry Wans (9 days ago)
GiarkReleos (9 days ago)
Historical data shows emphatically that when the conservatives are in power that the cost of goods always goes up, and the economy always ends up tanking.  Not sure why everyone is surprised?   donald trump and his clan are Imbeciles, AND puppets to the jews. (Please stop conflating jews with Hebrews, they are different peoples)

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