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Vanguard May Solve An Indexing Problem It Helped Create
FYI: The ease and frugality of investing in the stock market through index funds has made indexing so popular that no less an authority than John Bogle, the chairman of Vanguard and the instigator of the trend more than 40 years ago, felt compelled to issue a warning: Indexing conceivably could become so ubiquitous, albeit well into the future, that the stock market essentially ceases to function. Regards, Ted http://www.marketwatch.com/story/vanguard-may-solve-an-indexing-problem-it-helped-create-2017-07-12/print
The article refers to the potential creation of actively managed etfs that are clones of existing Vanguard funds. A clone of VMVFX, as mentioned in the article, would be a welcome addition.
Indeed, the active vs. passive debate has heated up recently. It will never end since I believe there will always be a cohort of active investors who will never be satisfied wth average market returns. More power to them.
The percentage of funds directed at passive products has increased for decades now. Today, roughly 40% of new money is committed to passive Index products. I believe that will continue but will not ever come close to the full 100%. Why? As more money enters the Index arena, more attractive alternate opportunities are created and induce active choices and participation.
Here is a Link that does a nice job at exploring the various possibilities in the active-passive debate.
Comments
Indeed, the active vs. passive debate has heated up recently. It will never end since I believe there will always be a cohort of active investors who will never be satisfied wth average market returns. More power to them.
The percentage of funds directed at passive products has increased for decades now. Today, roughly 40% of new money is committed to passive Index products. I believe that will continue but will not ever come close to the full 100%. Why? As more money enters the Index arena, more attractive alternate opportunities are created and induce active choices and participation.
Here is a Link that does a nice job at exploring the various possibilities in the active-passive debate.
https://blog.wealthfront.com/active-investing-versus-passive-investing/
Please access it for a very complete analyses. Enjoy.
Best Wishes
Thanks for posting the Wealthfront article.
Skeet