Snipped from the FT
Exchange traded funds have led to excessive trading and changed the way the stock market works, according to the man widely regarded as the father of passive investing, who is now calling for politicians to re-examine the sector.
Writing in an opinion piece for the Financial Times, Jack Bogle, the founder of the Vanguard Group, the world’s largest passive manager, complains that the annual turnover of shares in the biggest ETF, which tracks the S&P 500, can reach 3,000 per cent of its assets, and that the implications of this “trading — call it speculation — have yet to be fully examined”.
ETFs, introduced 25 years ago, now have more than $3tn in assets. They differ from traditional index mutual funds in that they are traded on stock exchanges, and can be bought and sold several times a day. Turnover at Vanguard’s largest mutual fund, which also tracks the S&P 500, is only 8 per cent each year. |
