Thursday, January 3, 2013
Bogle on ETFs: A More Nuanced View
http://www.garp.org/risk-news-and-resources/2012/december/bogle-on-etfs.aspxWhat Purpose Is Served?
"So, it's not all good and not all bad," Bogle concludes. "But it creates a risk that I prefer not to take if there's no value added." He notes that more than 70% of listings in which trading was suspended during the flash crash were ETFs.
Ultimately, Bogle's biggest beef is that he sees little practical reason for ETFs beyond generating business for investment advisers -- as marketing tools to justify pursuing the latest investment strategies and their accompanying fees. ETFs allow advisers to adjust clients' portfolios more easily than do mutual funds, and even if it's a minor adjustment, "you're deemed to be worthy as an adviser.
"I've said before that ETFs are the greatest marketing idea so far in the 21st century," Bogle states. "I have considerable doubts about whether they're the greatest investment idea."
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