Skip to main content
MENU
Subscribe
  • Subscribe
  • Account
  • LOGIN
  • Topics
    • Alternatives
    • Consultants
    • Coronavirus
    • Courts
    • Defined Contribution
    • ESG
    • ETFs
    • Hedge Funds
    • Industry Voices
    • Investing
    • Money Management
    • Opinion
    • Partner Content
    • Pension Funds
    • Private Equity
    • Real Estate
    • Russia-Ukraine War
    • SECURE Act 2.0
    • Special Reports
    • White Papers
  • Rankings & Awards
    • 1,000 Largest Retirement Plans
    • Top-Performing Managers
    • Largest Money Managers
    • DC Money Managers
    • DC Record Keepers
    • Largest Hedge Fund Managers
    • World's Largest Retirement Funds
    • Best Places to Work in Money Management
    • Excellence & Innovation Awards
    • WPS Innovation Awards
    • Eddy Awards
  • ETFs
    • Latest ETF News
    • Fund Screener
    • Education Center
    • Equities
    • Fixed Income
    • Commodities
    • Actively Managed
    • Alternatives
    • ESG Rated
  • ESG
    • Latest ESG News
    • The Institutional Investor’s Guide to ESG Investing
    • ESG Sustainability - Gaining Momentum
    • Climate Change: The Inescapable Opportunity
    • Impact Investing
    • 2022 ESG Investing Conference
    • ESG Rated ETFs
  • Defined Contribution
    • Latest DC News
    • DC Money Manager Rankings
    • DC Record Keeper Rankings
    • Innovations in DC
    • Trends in DC: Focus on Retirement Income
    • 2022 Defined Contribution East Conference
    • 2022 DC Investment Lineup Conference
  • Searches & Hires
    • Latest Searches & Hires News
    • Searches & Hires Database
    • RFPs
  • Performance Data
    • P&I Research Center
    • Earnings Tracker
    • Endowment Returns Tracker
    • Corporate Pension Contribution Tracker
    • Pension Fund Returns Tracker
    • Pension Risk Transfer Database
    • Future of Investments Research Series
    • Charts & Infographics
    • Polls
  • Careers
  • Events
    • View All Conferences
    • View All Webinars
    • 2022 Retirement Income Conference
    • 2022 Managing Pension Risk & Liabilities
    • 2022 WorldPensionSummit
Breadcrumb
  1. Home
  2. INVESTING & PORTFOLIO STRATEGIES
June 13, 2013 01:00 AM

John Bogle has already won

Investors have poured money into the lowest-cost funds and ETFs over the past decade, data show

Jason Kephart, InvestmentNews
  • Tweet
  • Share
  • Share
  • Email
  • More
    Reprints Print
    Share
    Share
    P&I, as of Sept. 30, 2014
    Assets: $89.9 billion
    Share
    P&I Research Center
    With $55.3 billion in total DB assets, Georgia Teachers' Retirement System has 53.5% of U.S. DB assets invested in domestic equity.
    Share
    P&I, as of Sept. 30, 2014
    Assets: $96.4 billion
    Share
    P&I, as of Sept. 30, 2014
    Assets: $186.4 billion
    Share
    P&I, as of Sept. 30, 2014
    Assets: $294.9 billion
    Share
    P&I, as of Sept. 30, 2014
    Assets: $158.7 billion
    Share
    P&I, as of Sept. 30, 2014
    Assets: $145.8 billion
    Share
    Share

    John Bogle, the 85-year-old founder of The Vanguard Group Inc., has been the most vociferous advocate against overpaying for investment management and, over the past 10 years, investors have shown that they have heard him loud and clear.

    U.S. equity mutual funds and exchange-traded funds with expense ratios in the lowest quartile have had net inflows of $442 billion over the past decade, according to Morningstar Inc. data.

    Equity funds with higher expense ratios saw investors flee to the tune of $368 billion over the same time period.

    The same trend has emerged in bond funds. The lowest-cost bond funds and ETFs have had $614 billion of inflows, while more-expensive options have netted just $144 billion since 2002.

    “The primary trend is toward indexing,” said Mike Rawson, a mutual fund analyst at Morningstar.

    The result has been that the average asset-weighted expense ratios fund investors are paying have dropped 31% to 64 basis points for equity funds and 28% to 47 basis points for bond funds from a decade ago.

    Passively managed index funds and ETFs have seen the lion's share, or about 85%, of net inflows into the lowest-cost funds, but the lowest-cost actively managed funds did manage to bring in about $67 billion.

    Low-cost actively managed funds have a better chance of outperforming, Mr. Rawson said.

    “It's low-cost funds that outperform, not necessarily index funds,” he said.

    With the data so clearly in the favor of low-cost funds, the pressure is on higher-expense mutual funds to bring down costs, something they have yet to tackle seriously. Expense ratios on actively managed equity funds, for example, have been stable around 1% over the past decade.

    “Why these active managers aren't getting on board (with low costs) is a little bit surprising to me,” Mr. Rawson said. “This should be a wake-up call for the rest of the industry.”

    "John Bogle has already won" originally appeared on InvestmentNews' website, a sister publication of Pensions & Investments.

    Related Articles
    iShares is rethinking index contracts
    Vanguard maintains strong asset growth
    Bogle: U.S. faces 3 retirement 'train wrecks'
    Vanguard has first monthly net redemptions in almost two decades
    Jack Bogle: Don't look at DC account balance until retirement
    Passive equity portfolios of 10 large pension funds
    Recommended for You
    More funds testing water on crypto-related assets
    More funds testing water on crypto-related assets
    Money managers eager to make leap to opportunity zone investing
    Money managers eager to make leap to opportunity zone investing
    Index investing: Not as passive as you might think
    Index investing: Not as passive as you might think
    Private Markets
    Sponsored Content: Private Markets

    Reader Poll

    August 10, 2022
    SEE MORE POLLS >
    Sponsored
    White Papers
    Gaining Momentum: Where Next for Trend-Following?
    The market opportunity in U.S. residential mortgage-backed securities
    Credit Indices Evolve with Enhanced Data Inputs
    Hedge Funds 2.0: Back to the future
    How Has 2022's Carnage Reshaped Global Stock and Bond Markets?
    Crossroads: Politics, Inflation, & Bonds
    View More
    Sponsored Content
    Partner Content
    The Industrialization of ESG Investment
    For institutional investors, ETFs can make meeting liquidity needs easier
    Gold: the most effective commodity investment
    2021 Investment Outlook | Investing Beyond the Pandemic: A Reset for Portfolios
    Ten ways retirement plan professionals add value to plan sponsors
    Gold: an efficient hedge
    View More
    E-MAIL NEWSLETTERS

    Sign up and get the best of News delivered straight to your email inbox, free of charge. Choose your news – we will deliver.

    Subscribe Today
    August 1, 2022 page one

    Get access to the news, research and analysis of events affecting the retirement and institutional money management businesses from a worldwide network of reporters and editors.

    Subscribe
    Connect With Us
    • RSS
    • Twitter
    • Facebook
    • LinkedIn

    Our Mission

    To consistently deliver news, research and analysis to the executives who manage the flow of funds in the institutional investment market.

    About Us

    Main Office
    685 Third Avenue
    Tenth Floor
    New York, NY 10017-4036

    Chicago Office
    130 E. Randolph St.
    Suite 3200
    Chicago, IL 60601

    Contact Us

    Careers at Crain

    About Pensions & Investments

     

    Advertising
    • Media Kit
    • P&I Content Solutions
    • P&I Careers | Post a Job
    • Reprints & Permissions
    Resources
    • Subscribe
    • Newsletters
    • FAQ
    • P&I Research Center
    • Site map
    • Staff Directory
    Legal
    • Privacy Policy
    • Terms and Conditions
    • Privacy Request
    Pensions & Investments
    Copyright © 1996-2022. Crain Communications, Inc. All Rights Reserved.
    • Topics
      • Alternatives
      • Consultants
      • Coronavirus
      • Courts
      • Defined Contribution
      • ESG
      • ETFs
      • Hedge Funds
      • Industry Voices
      • Investing
      • Money Management
      • Opinion
      • Partner Content
      • Pension Funds
      • Private Equity
      • Real Estate
      • Russia-Ukraine War
      • SECURE Act 2.0
      • Special Reports
      • White Papers
    • Rankings & Awards
      • 1,000 Largest Retirement Plans
      • Top-Performing Managers
      • Largest Money Managers
      • DC Money Managers
      • DC Record Keepers
      • Largest Hedge Fund Managers
      • World's Largest Retirement Funds
      • Best Places to Work in Money Management
      • Excellence & Innovation Awards
      • WPS Innovation Awards
      • Eddy Awards
    • ETFs
      • Latest ETF News
      • Fund Screener
      • Education Center
      • Equities
      • Fixed Income
      • Commodities
      • Actively Managed
      • Alternatives
      • ESG Rated
    • ESG
      • Latest ESG News
      • The Institutional Investor’s Guide to ESG Investing
      • ESG Sustainability - Gaining Momentum
      • Climate Change: The Inescapable Opportunity
      • Impact Investing
      • 2022 ESG Investing Conference
      • ESG Rated ETFs
    • Defined Contribution
      • Latest DC News
      • DC Money Manager Rankings
      • DC Record Keeper Rankings
      • Innovations in DC
      • Trends in DC: Focus on Retirement Income
      • 2022 Defined Contribution East Conference
      • 2022 DC Investment Lineup Conference
    • Searches & Hires
      • Latest Searches & Hires News
      • Searches & Hires Database
      • RFPs
    • Performance Data
      • P&I Research Center
      • Earnings Tracker
      • Endowment Returns Tracker
      • Corporate Pension Contribution Tracker
      • Pension Fund Returns Tracker
      • Pension Risk Transfer Database
      • Future of Investments Research Series
      • Charts & Infographics
      • Polls
    • Careers
    • Events
      • View All Conferences
      • View All Webinars
      • 2022 Retirement Income Conference
      • 2022 Managing Pension Risk & Liabilities
      • 2022 WorldPensionSummit