Jack Bogle: The fund manager who hates ETFs

For Jack Bogle, founder of investment firm Vanguard, exchange-traded funds are all about the marketing. Cris Sholto Heaton reports.

Exchange-traded funds (ETFs) are the "greatest marketing innovation of the 21st century", says Jack Bogle, founder of investment firm Vanguard, interviewed in the FT. But whether they are the "greatest investment innovation" remains to be seen. "I do not believe [they are]; I think [they] will hurt returns for investors."

Bogle is well-known for his opposition to ETFs, which are one of the fastest-growing parts of the investment industry. That may sound surprising, given that ETFs are generally associated with low costs and indexing (tracking an index such as the FTSE 100 instead of trying to beat the market) exactly the principles on which Bogle created Vanguard 40 years ago.


Bogle's concerns meant that Vanguard was slow to embrace ETFs. It launched its first one in 2001 after Bogle stood down as chief executive, more than ten years after ETFs initially appeared in Canada. This gave rivals such as iShares (now owned by BlackRock) and State Street's SPDRs range a head start.

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Yet Vanguard is now catching up: with around $430bn in US-listed ETFs, it's neck and neck with State Street in the American market (BlackRock remains some way ahead with over $750bn). That's still less than a sixth of Vanguard's $3trn in total assets, but the trend is clear. Whether Bogle approves of ETFs or not, Vanguard's clients increasingly do.

Cris Sholto Heaton

Cris Sholto Heaton is an investment analyst and writer who has been contributing to MoneyWeek since 2006 and was managing editor of the magazine between 2016 and 2018. He is especially interested in international investing, believing many investors still focus too much on their home markets and that it pays to take advantage of all the opportunities the world offers. He often writes about Asian equities, international income and global asset allocation.

Cris began his career in financial services consultancy at PwC and Lane Clark & Peacock, before an abrupt change of direction into oil, gas and energy at Petroleum Economist and Platts and subsequently into investment research and writing. In addition to his articles for MoneyWeek, he also works with a number of asset managers, consultancies and financial information providers.

He holds the Chartered Financial Analyst designation and the Investment Management Certificate, as well as degrees in finance and mathematics. He has also studied acting, film-making and photography, and strongly suspects that an awareness of what makes a compelling story is just as important for understanding markets as any amount of qualifications.