Vanguard Group founder John Bogle famously isn’t a fan of exchange traded funds (ETFs). Now he’s released a study showing that investors generally make poor decisions when buying and selling them.
According to Bogle’s analysis, 68 of the 79 ETFs that were covered had investor returns that were short of the returns earned by the funds themselves. Additionally, investors seemed to do the worst in high-profile and volatile sectors such as emerging markets, financials and REITs, states Matt Hougan for Index Universe.
To criticize ETFs is a little like criticizing cars – just because people can and do misuse them and get hurt, the majority of people are responsible and careful. It’s certainly okay to raise some caution and make investors aware of the risks, but after that, it’s up to them.
We certainly know our readers at ETF Trends are educated, intelligent and curious – they’re constantly seeking out new information and strategies. It certainly isn’t fair to paint all ETF investors with the same brush when most of them do act in a responsible manner.
Bogle is a legend and the earliest proponent of indexing. He’s been absolutely right on that front, and we have the utmost respect for him and his work.