Indexing pioneer Bill Fouse is unhappy about the shallow market share held by indexed assets.
"I stand here today dejected about what we've accomplished," Mr. Fouse said at a recent conference.
"At the end of 1997, indexing constituted only 6.1% of all securities and 27% of institutional. I would have forecast 75% by now," he said.
With three out of four active managers underperforming their benchmarks, indexing should have gained more ground, he said.
"I doubt index fund managers will have a more favorable time to capitalize. But index fund managers today are intent on self-destruction. What was originally a 10-basis-point business is close to two basis points, heading toward one basis point," he said.
Mr. Fouse was a moving force in indexing in the early 1970s, which he characterized then as being "an anti-establishment idea" that belonged to "the true believers."
He also had predicted pension funds would quit paying asset-based fees and would be buying information from investment firms, rather than hiring them for active management.
"I'm amazed this hasn't happened either," he said. Mr. Fouse made his remarks at a conference hosted last month by the Association for Investment Management and Research in Philadelphia.