Just in:
Court Sides with Coinbase on Wallet Service, But Staking Program Remains in Limbo // In Lok Sabha Polls In Punjab, AAP Is Advantageously Placed As Against Its Three Rivals // Superland Announced Annual Results for 2023, 2023 Net Profit Increased approximately 39.5% to approximately HK$22.2 million as Compared to the 2022 Adjusted One // Ajman Celebrates Conclusion of Ramadan Activities with Grand Ceremony // Emirates Post Speeds Up Deliveries for GCC with Special Day // No running of govt from jail, says Delhi Lt Governor // German Job Market Resilience Bodes Well for Economic Recovery // Sharpening the Focus: Sharjah Health Department Refines Evaluation Criteria for “Healthy Schools Programme” // Infineon and HD Korea Shipbuilding & Offshore Engineering jointly develop ship electrification technology // Sunshine’s Debut Features Leave Tech World Scratching Its Head // Meta Earth Official Website Launch: The Pioneer Explorer in the Modular Public Blockchain Domain // Experts come together to support updating the city’s nature conservation masterplan // AI Boost for Galaxy Devices: Samsung Expands One UI 6.1 Update // Hope for Respite as UAE Endorses UN Plea for Gaza Truce // U.S. Compliance Takes Center Stage at OKX Following Industry Jitters // Andertoons by Mark Anderson for Thu, 28 Mar 2024 // Konica Minolta is named ASEAN 2023 Market Leader in Colour Light and Mid Digital Production Printers // Universal Language for Healthcare: General Authority Embraces Global Coding System // Hullabaloo About Electoral Bonds May End Up As A Whimper Pre And Post Poll // Near Miss at Kolkata Airport: IndiGo Plane Makes Contact with Stationary Air India Express //
HomeMarketsBogle calls for politicians to re-examine ETFs

Bogle calls for politicians to re-examine ETFs

fa622318 bb0f 11e6 8b45 b8b81dd5d080

Exchange traded funds have led to excessive trading and changed the way the stock market works, according to the man widely regarded as the father of passive investing, who is now calling for politicians to re-examine the sector.

Writing in an opinion piece for the Financial Times, Jack Bogle, the founder of the Vanguard Group, the world’s largest passive manager, complains that the annual turnover of shares in the biggest ETF, which tracks the S&P 500, can reach 3,000 per cent of its assets, and that the implications of this “trading — call it speculation — have yet to be fully examined”.

ADVERTISEMENT

ETFs, introduced 25 years ago, now have more than $3tn in assets. They differ from traditional index mutual funds in that they are traded on stock exchanges, and can be bought and sold several times a day. Turnover at Vanguard’s largest mutual fund, which also tracks the S&P 500, is only 8 per cent each year.

Mr Bogle, who retains a huge influence among investors although he has retired from day to day management at Vanguard, told the Financial Times: “Yes, it is high time both the ETF industry and policymakers re-examine the entire ETF ecosystem. Why? Because of its sheer size and fragility in times of market stress.”

He added that anecdotal evidence appeared to show that this “higher trading activity takes its toll on investor wealth”. Looking at the returns actually paid to investors in Vanguard’s biggest funds — where mutual fund and ETF investors are invested in the same underlying fund — he found that ETF investors’ returns trailed by 1.6 per cent over 12 months.

He also complained that the ETF industry is moving into specific investment strategies, known as strategic beta or smart beta, and concentrated sectors, which charge higher costs. He said the annual expense ratios of strategic beta ETFs (0.24 per cent) and concentrated ETFs (0.33 per cent) were double the charge for broad ETFs (0.15 per cent), and traditional index funds (0.16 per cent).

Vanguard, where Mr Bogle set up the first index mutual fund in 1976, is the leading provider of traditional index funds but is second to BlackRock’s iShares division in ETFs, largely because, as he recounts in the piece, Mr Bogle turned down an offer to launch the first ETF in 1993.

Source link

ADVERTISEMENT

ADVERTISEMENT
Just in:
AI Boost for Galaxy Devices: Samsung Expands One UI 6.1 Update // Ajman Celebrates Conclusion of Ramadan Activities with Grand Ceremony // Andertoons by Mark Anderson for Thu, 28 Mar 2024 // Hullabaloo About Electoral Bonds May End Up As A Whimper Pre And Post Poll // Party Nominees Refusing To Contest: Major Perception Threat For BJP // AIA Hong Kong Wins More Than 20 Accolades at MPF Ratings MPF Awards, BENCHMARK MPF of The Year Awards and Bloomberg Businessweek Top Fund Awards // Experience Ultimate Shopping Freedom at 4.4 Shopee Spree: Don’t Worry, Shop Shopee! // Sunshine’s Debut Features Leave Tech World Scratching Its Head // Experts come together to support updating the city’s nature conservation masterplan // Lisboeta Macau’s world first LINE FRIENDS PRESENTS CASA DE AMIGO and BROWN & FRIENDS CAFE & BISTRO has officially opened // Near Miss at Kolkata Airport: IndiGo Plane Makes Contact with Stationary Air India Express // Meta Earth Official Website Launch: The Pioneer Explorer in the Modular Public Blockchain Domain // Renewables Surge Sets Record, But Global Equity Lags // U.S. Compliance Takes Center Stage at OKX Following Industry Jitters // Sharpening the Focus: Sharjah Health Department Refines Evaluation Criteria for “Healthy Schools Programme” // In Lok Sabha Polls In Punjab, AAP Is Advantageously Placed As Against Its Three Rivals // Infineon and HD Korea Shipbuilding & Offshore Engineering jointly develop ship electrification technology // No running of govt from jail, says Delhi Lt Governor // Court Sides with Coinbase on Wallet Service, But Staking Program Remains in Limbo // Arvind Kejriwal Gets International Heft Against The Deshi Vishwaguru //