When has any of Vanguard's index fund manager said: I don't believe in indexing. If they did not believe in indexing, they would not do it for a living.

So where do Vanguard managers index at then, Fidelity?

Instead of wondering go to the Vanguard web pages for the funds and see when they started working in investment management.  For the managers listed in the report, it has been since 1992 or earlier..

So they've worked at Vanguard since at least 1992, and still have no assets to invest in their own fund?  That's not believable.

I can afford Vanguard's minimum investment requirements

I imagine most long-term investors can, but maybe not those who are early on in their investing careers or those who are opening new accounts? 

and deal directly with them.

I expect that's exactly what Vanguard wants.  That way customers are repeatedly exposed to Vanguard fund names and performance lists.

Thanks M* and T for calling attention to this.

It certainly throws quite a light on the difference between a lot of Vanguard talk and walking the walk.

There's a definite credibility problem, and I l would love to hear John Bogle's take on this information.

This said, has there ever been a study done that examined the correlation between a fund's performance and manager ownership?  Perhaps M* has some info about this.  Bob U. 

RatonBob, this is a bit OT, but I'll respond.

Vanguard's fees are set very low to be of benefit to most customers. Consequently, the expenses of servicing an account start to play in. For example, it may take a 5K position in a fund to start to make a profit because of the effort it takes to service the account. In other words, the company is subsidizing the smaller accounts at the expense of the larger accounts. So, there needs to be a balance between helping out the entry-level investors and the larger investors. That is simply how the fees stay so low.

...That is simply how the fees stay so low.

I can understand that point.  And certainly Vanguard does have very low fees, especially for their index funds.

But when opening an ESA with the max $2000 contribution, it felt like Vanguard was chasing me away with a stick...

With a so-called "managed" fund (i.e., non-index), I think having significant manager ownership is the most straightforward way to minimize conflicts of interest with shareholders. It doesn't eliminate conflict of interest, of course, since in most cases the managers receive more from investment fees than they earn on their investments, but I still feel it's a very good idea.

I looked up some "eat your own cooking" fund recommendations of mine that were made in 1996 and 1998. There were six recommendations. Looking at the trailing 10-year returns of these six...

One of them has been a bum, lagging the relavant index by a little more than 1% annually, and sitting at a 71% rank among peers (1% being the best, and 99% being the worst.)

The other five all beat their relavent indexes by more than 2% annually, and the best one outperformed by 5% annually. Four of the five stand at a 10% or higher rank among peer funds, and the fifth stands at the 31% mark. Three of the five are LB funds, one MB, one LV, and one WS (M* categories).

Regards,

Duane

Vanguard's Index managers don't even invest in indexes for themselves.

Very telling.

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Now I understand why indexers need national conventions, regional support groups and a non inclusive, totally exclusive ultra monitored message board....

Drink the punch folks!

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If there's one thing I want to control in the entire process of hiring an entity to manage my money using any certain method, I at least want the entity itself to believe in the method. The fact Vanguard managers own on 'average' little of their own funds, is simply a 100% betrayal of the public's trust.

t

RatonBob:

When has any of Vanguard's index fund manager said: I don't believe in indexing. If they did not believe in indexing, they would not do it for a living.

So where do Vanguard managers index at then, Fidelity?

I have no idea where Vanguard manager who decide to invest in certain index in their personal portfolios put their money.  Not all index funds are appropriate for all investors. Just as I only invest my personal portfolio in the index funds that are appropriate for me, I suspect that Vanguard managers do similarly.

RatonBob:

Instead of wondering go to the Vanguard web pages for the funds and see when they started working in investment management.  For the managers listed in the report, it has been since 1992 or earlier..

So they've worked at Vanguard since at least 1992, and still have no assets to invest in their own fund?  That's not believable.

How much they invest in the fund that they manage depends on their personal investment needs.  In investment, one size does not fit all.

RatonBob:

I can afford Vanguard's minimum investment requirements

I imagine most long-term investors can, but maybe not those who are early on in their investing careers or those who are opening new accounts? 

Those early on in their investing careers can invest elsewhere.  If they can later meet the minimum investment requirements of a fund and investing in that fund is appropriate for them, they can begin investing in that fund.

RatonBob:

and deal directly with them.

I expect that's exactly what Vanguard wants.  That way customers are repeatedly exposed to Vanguard fund names and performance lists.

I'm no more exposed to Vanguard fund names and performance lists than I am to the fund names and performance list of other fund families in whose funds I invest.

TaylorZR:

Now I understand why indexers need national conventions, regional support groups and a non inclusive, totally exclusive ultra monitored message board....

I suppose that means that I'm not an indexer;  I have never been attended a national convention or been involved with a regional support group or a non inclusive, totally exclusive ultra monitored message board.