Passive index investing and the dislocation of value

Jack Bogle of the Vanguard Group is essentially the savior of a great many investors out there who save and invest for their retirement. Buffett himself called Bogle a hero and championed his philosophy of passive investing. Buffett told everyone (his children, most investors) to chuck their money in passive index funds and not do anything else.

Vanguard is most famous for its numerous funds that track indices, of which the most famous would be VOO — the ticker symbol for the Vanguard S&P 500 ETF. The fee war between BlackRock, State Street, Vanguard, and other asset managers are a boon to passive investors with a race to zero offering the best, almost mirror-like returns for the index funds they invest in.

Endless articles and empirical data are out there promoting passive investing in major indices over active investing. The reason is simple yet brutal: the ultra-smart guys in hedge …

Read the full article →

Leave a Reply

Your email address will not be published. Required fields are marked *