Tag Archives: John Bogle

Why Do Vanguard ETFs Dominate Low-Cost Portfolios?


The rise of exchange-traded funds, or ETFs, has been a critical factor in the rise of automated investment services like Wealthfront. ETFs are on average cheaper, more tradable and more tax-efficient than traditional index funds (see Why Index ETFs Are The Automated Investment of Choice). They allow everyday investors to access the same high quality products at the same ultra-low prices as the largest institutional investors in the world. There are now more than 60 companies offering ETFs in the U.S. with a combined $2.1 trillion under management. If you look at the average Wealthfront portfolio, however, you’ll notice it’s dominated by ETFs from one firm: Vanguard. On average, upwards of 90% of our initial portfolio allocations go into Vanguard […]

Wealthfront Named ETF Strategist of the Year

Today I am proud to announce that Wealthfront has been named the “ETF Strategist of the Year” by ETF.com (formerly IndexUniverse), the world’s leading authority on exchange-traded funds. We are especially gratified to be chosen for this award from among all investment management firms that use ETFs, not just new entrants. At Wealthfront, we strive to build a world-class investment service and we’re proud to have assembled an unparalleled investment team led by Burton Malkiel. Over the past year, we added asset classes, released an improved and more diversified investment mix, delivered different asset allocations for taxable vs. retirement accounts to improve after tax returns, and launched the Wealthfront 500. In short, we aim to relentlessly improve our service to […]

Wall Street Ethics: The Vanguard Test

Last week, Susanne Craig and Jessica Silver-Greenberg of The New York Times wrote a smoking-gun story about the lack of ethics at JPMorgan Chase. “[As JPMorgan Chase] became one of the nation’s largest mutual fund managers, some current and former brokers say it emphasized its sales over clients’ needs,” wrote the duo. This is a surprise to people? For decades, the traditional investment business, aka “Wall Street,” has thrived on a hard-core sales culture, with a legal and ethical credo that amounts to buyer beware. Of course, it’s hard for buyers to beware in such a complicated business with so little transparency. Every few years, journalists and regulators rediscover the problem with Wall Street. In a follow up story to […]

Are There Socially Conscious Ways To Invest?

If you have a question for The Upfront Blog, please leave it in our comments section, e-mail betsy@wealtfront.com or send it via our twitter feed: @wealthfront. Are there socially conscious ways to invest? -Kara Bloomgarden-Smoke, 26 The short answer is yes. But before you decide to practice socially responsible investing, you should carefully consider what exactly it means to you – and how much you’re willing to sacrifice in terms of money and transparency to follow your conscience. Socially responsible investing, or “SRI,” is defined as investing in which both traditional financial factors and ethical concerns are taken into account. Most people, when thinking about socially responsible investing, go straight to the conventional window on the issue: drop your money […]

Where’s The Revolt Against Mutual Fund Fees?

Last week came news that big banks were backing off debit card fees. ABC News highlighted the role that Molly Katchpole, a young woman from Washington, D.C., played in launching an online petition against the fees. “I don’t have an extra $60 a year to give to Bank of America,” she said. “Score one for a customer rebellion,” said Diane Sawyer. The question is why there’s no consumer rebellion when it comes to mutual fund fees. According to the Bogle Financial Markets Research Center, investors spent a total of $76.5 billion in mutual fund fees. According to the Investment Company Institute’s Fact Book, in 2010, there were 90.2 million individual mutual fund investors, representing 51.6 million households. Back of the […]

John Bogle Says Invest, But Tamp Down Expectations

In a Wall Street Journal interview, John Bogle, the famous founder of Vanguard Group, said he expects stocks to return an average annual return, including dividends, of about 7% over the next decade. (It’s truly time for people who came of age as investors during the 1990s to let go of that halcyon time of double-digit returns!) “Diversification is not only the first important thing investors should think about, but the second and the third, and probably the fourth and fifth, too,” he said. He explained that it is worth taking the risk of betting against the collective judgments of other investors only when you know far more than they do about an investment. For most people, this won’t happen […]

How To Tell If Your Advisor Eats His Own Cooking And What John Bogle Has To Say About It

A recent study by research firm Morningstar Inc. found that just 40% of mutual fund managers were doing with their own money what they want you to do with yours: invest in their funds. After the report came out, the digital ink flowed on the question of whether mutual fund managers should “eat their own cooking.” I don’t think there’s much doubt about it. Except in a few well-thought-out cases, money managers should be required by their companies to invest in their own products. I’d go one step further and say that financial advisors ought to have money in the same products they recommend to you. For years, the savviest investors, top tier endowment managers and the best financial advisors, […]