Given that John Bogle helped create the first index mutual fund in 1975, it should come as no surprise that he is a huge proponent of index funds. The founder and former chief executive and chairman of Vanguard Group, Inc. argues that even the most successful fund managers are destined to stumble as their funds get bloated and revert to the mean, so why pay extra for what will ultimately turn out to be average performance (or worse).
I just ran across an interview with Bogle in Bottom Line/Personal where he advised:
“I tell investors who are sick of hearing me tout the benefits of index funds that they must, at least, be disciplined. Keep 95% of your portfolio in index funds, and use the rest to pick stocks or actively managed funds.”
Whether or not you agree with the 95/5 split — personally, I do 100% index funds, but others undoubtedly come down more heavily on the actively-managed side of things — it’s still interesting to hear his about his favorite (non-Vanguard, of course) mutual fund families:
Dodge & Cox Funds
The Oakmark Funds
The Royce Funds
The Torray Funds
Tweedy, Browne Co.
The Weitz Funds
Given Bogle’s stature in the investing world, this definitely food for thought. Of course, he didn’t pick specific funds, but the list above is a good jumping off point.
And, as Bogle says:
“Make a 10-year commitment, and don’t bail out if your managed fund underperforms its benchmark index in any given year.”
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