If Mr. Bogle believed that low cost index funds is the way to go...?

[Safire]

Then why does Vanguard offer actively traded funds?

I'm not trying to start anything, I just finished watching an PBS documentary where Mr. Bogle was one of the many interviewed and he repeats his philosophy of low cost index funds as being the safest way to amass wealth. Then why offer actively traded funds? What is the philosophy there?

I am eyeing two actively managed funds my husband's employer just started offering in his 401K and want to make sure he knows what he's doing if he's going to start investing in them.

Thanks.

 

[RetiredAt49]

Well Mr. Bogle died a few years ago and Vanguard has changed. I believe Jack’s recommendation using low cost index funds are a very smart way to invest long term.

The founder of the 4% retirement rule (Mr. Bengen) doesn’t follow his own advice/research but I believe Bogle did - at least while he was alive.

 

[RetiredAt55.5]

Jack Bogle lost control of Vanguard in 1999 and was pushed aside.

MANY things would be different if he was still running the company.

 

[audreyh1]

Those well regarded Vanguard balanced funds run by Wellington Asset Management were available well before 1999. I think they are ~40 years old.

ETA: even older. These predate John Bogle.

Founded in 1929, Wellington™ Fund is Vanguard’s oldest mutual fund and the nation’s oldest balanced fund. It offers exposure to stocks (about two-thirds of the portfolio) and bonds (one-third of the portfolio). Another key attribute is broad diversification—the fund invests in stocks and bonds across all economic sectors. This is important because one or two holdings should not have a sizeable impact on the fund. Investors with a long-term time horizon who want growth and are willing to accept stock market volatility may wish to consider this as a core holding in their portfolio.

https://investor.vanguard.com/investment-products/mutual-funds/profile/vwenx

 

[Safire]

Well Mr. Bogle died a few years ago and Vanguard has changed. I believe Jack’s recommendation using low cost index funds are a very smart way to invest long term.

The founder of the 4% retirement rule (Mr. Bengen) doesn’t follow his own advice/research but I believe Bogle did - at least while he was alive.

VWELX is an actively traded funds, and it's an old fund. I am sure there are others but this is the one that caught my eye as it is now offered by his employer.

 

[unclemick]

Active funds/stocks/RE/precious metals /etc./etc since 1966.

Bogle since 1977ish in my 401k - 'bought the haystack cause the needles are in there.' - or ' hurry up just stand there.'

60/40 to start cause that's what I perceived pension funds did to 30/70 at age 80 via Target Retirement.

Never beat Bogle had some short term successes. Bogle still ' big dog on the porch.'

ER'd at age 50 with 'enough.'

Heh heh heh - at age 80 still putz! Mad money, male hormones, no illusions of great wealth, or 'legend in my own mind as a stock picker.' Beats golf,

 

[audreyh1]

Jack Bogle joined Wellington Asset Management in 1951 and Vanguard was created from there in 1974.

In 1967, Mr. Bogle led the merger of Wellington Management Company with the Boston investment firm Thorndike, Doran, Paine & Lewis (TDPL). Seven years later, a management dispute with the principals of TDPL led Mr. Bogle to form Vanguard in September 1974 to handle the administrative functions of Wellington’s funds, while TDPL/Wellington Management would retain the investment management and distribution duties. The Vanguard Group of Investment Companies commenced operations on May 1, 1975.

To describe his new venture, Mr. Bogle coined the term “The Vanguard Experiment.” It was an experiment in which mutual funds would operate at cost and independently, with their own directors, officers, and staff—a radical change from the traditional mutual fund corporate structure, whereby an external management company ran a fund’s affairs on a for-profit basis.

https://corporate.vanguard.com/cont...form Vanguard in,describe his new venture, Mr.

He was also involved in the creation of the PrimeCap fund - another active fund. https://boglecenter.net/wp-content/uploads/PRIMECAP-30th-Anniversary.pdf

So you can see that the active funds are really part of their older history that Vanguard kept going.

 

[Safire]

Jack Bogle joined Wellington Asset Management in 1951 and Vanguard was created from there in 1974. He also created the PrimeCap fund - another active fund.



https://corporate.vanguard.com/cont...form Vanguard in,describe his new venture, Mr.

VPMAX - which, while it has beaten the market solidly - has an impressive turnover of only 3%, like an index fund. But technically, it IS an actively managed fund.

 

[NW-Bound]

Indeed, some of the funds offered by Vanguard predated Bogle's creation of the S&P Index fund. Wellesley and Wellington were already mentioned.

Here's another one: Windsor Fund, with an inception date of 1958. Its performance in recent years was not impressive, but it used to be under the management of the late John Neff.

John B. Neff (September 19, 1931 – June 4, 2019) was an American investor, mutual fund manager, and philanthropist. He was notable for his contrarian and value investing styles as well as for heading Vanguard's Windsor Fund.

Windsor became the highest returning, and subsequently largest mutual fund in existence during Neff's management, eventually closing to new investors for a period in the 1980s. Neff retired from Vanguard in 1995. During Neff's thirty-one-year tenure at Windsor (1964 to 1995), the fund returned 13.7% annually versus 10.6% for the S&P 500

Compounding at 10.6% for 30 years gives a gain of 20.5x. At 13.7%, the gain is 47.1x.

PS. After adjustment for inflation, the gains would be 4.2x and 9.7x.

 

[Midpack]

As others have said, Vanguard grew out of a firm that already had actively managed funds. I would imagine starting a firm with nothing but passively managed funds and nothing else in 1976, at the time a first, would have been (nearly) impossible. The concept grew alongside well established traditional actively managed funds.

https://en.wikipedia.org/wiki/The_Vanguard_Group

 

[target2019]

Then why does Vanguard offer actively traded funds?

I'm not trying to start anything, I just finished watching an PBS documentary where Mr. Bogle was one of the many interviewed and he repeats his philosophy of low cost index funds as being the safest way to amass wealth. Then why offer actively traded funds? What is the philosophy there?

I am eyeing two actively managed funds my husband's employer just started offering in his 401K and want to make sure he knows what he's doing if he's going to start investing in them.

Thanks.

What you are pointing to (Bogle's beliefs and theories) has always been an opposing force in a growing investment company. Large companies must grow, or they fall apart. But if the product is pure index, how does a company grow? Only by having a wide moat would Vanguard grow if they have just one product.

Vanguard is not just a singular force. To compete with other growing companies they must offer products to attract investors. And they must offer a broad menu now to keep competitors at bay.

If a 401(k) has some active investing funds, they can work. But you do need to look under the hood to understand what is truly going on over long periods of time.

 

[DrRoy]

It's not their main thing, but there's a market for it.

 

[MRG]

As others have said, Vanguard grew out of a firm that already had actively managed funds. I would imagine starting a firm with nothing but passively managed funds and nothing else in 1976, at the time a first, would have been (nearly) impossible. The concept grew alongside well established traditional actively managed funds.

https://en.wikipedia.org/wiki/The_Vanguard_Group

Without the active funds, there's no money to turn on the lights.

 

[Chuckanut]

Years ago I knew a guy who owned a small camera store. He thought the big name brands - Nikon, Canon, Minolta - were overpriced and not that great. So he only sold minor brands that he thought were better. He many have been right. But, many customers wanted Nikon, Canon and Minolta so they went to other stores. And they never came back. He went bust.

Maybe that is why Vanguard has managed funds.

 

[Koolau]

Active funds/stocks/RE/precious metals /etc./etc since 1966.

Bogle since 1977ish in my 401k - 'bought the haystack cause the needles are in there.' - or ' hurry up just stand there.'

60/40 to start cause that's what I perceived pension funds did to 30/70 at age 80 via Target Retirement.

Never beat Bogle had some short term successes. Bogle still ' big dog on the porch.'

ER'd at age 50 with 'enough.'

Heh heh heh - at age 80 still putz! Mad money, male hormones, no illusions of great wealth, or 'legend in my own mind as a stock picker.' Beats golf,

Pssst! Wellesley. Got me started and still think it's worth the small mgmt. fee.



SWAG is that JB tolerated such things because he knew that some folks still doubted his cheap index strategy. Why not have a great fund in there like Wellesley for those a bit less committed to the JB strategy?

 

[easysurfer]

Why? Reminds me of the time I bought a tiny microwave oven as I had not need for a family sized one but the saleperson seemed rather upset he couldn't get a bigger sale.

Why does VG offer actively traded funds? The same reason I guess that a company like Ford offers a whole different line of vehicles instead of say, their popular truck.

 

[Gumby]

I wonder how the bond component of Wellesley (VWIAX) performed over the past two years compared to a bond index fund like Vanguard Total Bond Index Fund (VBTLX)? That's where active management might have helped versus straight indexing.

 

[OldShooter]

... I am eyeing two actively managed funds my husband's employer just started offering in his 401K and want to make sure he knows what he's doing if he's going to start investing in them. ...

If I were advising a relative of mine I would say to stick with total market index funds, one US and seasoned to taste with one international.

Actively managed funds are almost certain to underperform the indexes even if the managers have recently gotten lucky and are selling based on that. Fees will be much higher, too.

VG. like any company, tries to offer what the market demands.

 

[Love This Community]

https://youtu.be/MLgn_kVKjCE?feature=shared

Recent (old) video I came across. I think at 37:00 minutes, he delves into this topic. As other posters mentioned, Vanguard offers different products because some people want them

 

[threeonesix]

Then why does Vanguard offer actively traded funds?

I'm not trying to start anything, I just finished watching an PBS documentary where Mr. Bogle was one of the many interviewed and he repeats his philosophy of low cost index funds as being the safest way to amass wealth. Then why offer actively traded funds? What is the philosophy there?

I am eyeing two actively managed funds my husband's employer just started offering in his 401K and want to make sure he knows what he's doing if he's going to start investing in them.

Thanks.

My local Kroger chain sells both their own Kroger-branded goods as well as well-known national brands. Why? One word; profit. Buyers want choices, and that includes investments. Vanguard can do better for all of its clients when that is a growing group, not stagnant.