The latest blow to active fund-management has come from legendary investor Warren Buffett.
In his annual letter to investors; the ‘Sage’ of Omaha referred to Vanguard’s founder Jack Bogle as his ‘hero’ for protecting millions of investors from the high costs associated with active fund management. ‘As Gordon Gekko might have put it: “Fees never sleep,”‘ he quipped in his letter.
‘My calculation, admittedly very rough, (he says) is that the search by the ‘elite’ for superior investment advice has caused it, in aggregate, to waste more than $100 billion over the past decade.’
Buffett believes Bogle’s fight against this regime should get much greater recognition.
‘If a statue is ever erected to honor (sic) the person who has done the most for American investors, the hands-down choice should be Jack Bogle,’ he wrote.
‘For decades, Jack has urged investors to invest in ultra-low-cost index funds. In his crusade, he amassed only a tiny percentage of the wealth that has typically flowed to managers who have promised their investors large rewards while delivering them nothing – or, as in our bet, less than nothing – of added value.’
Investor assets held by the Vanguard Group, which 87-year-old Bogle founded in 1974, hit $4 trillion (£3.2 trillion) for the first time in January, underlining how its concept has resonated with investors (and now increasingly so here in the UK…comment Jeremy Brett).
‘In his early years, Jack was frequently mocked by the investment-management industry,’ Buffett wrote.
‘Today, however, he has the satisfaction of knowing that he helped millions of investors realise far better returns on their savings than they otherwise would have earned. He is a hero to them and to me.’
Any of this sound familiar?? (JB)
Extract from New Model Adviser 27th February 2017