CaveatEmptor wrote:Some of Vanguard's offerings are not consistent with the contents of their very useful educational articles. Their educational material is negative on the benefits of High-Yield, but they offer investors a High-Yield bond fund. Fine. But their educational materials are also repeatedly positive on collateralized commodity futures (CCFs), yet they choose to not offer any fund for that asset class, even though they could do so at little extra cost (they already have a CCF vehicle for their managed payout funds to invest in). I say this not to comment on the virtues (or lack thereof) of High-Yield or CCF investments, but to express my puzzlement at what looks like large inconsistencies between what Vanguard says and what Vanguard offers. And let's not even talk about when *both* their educational materials and the fund offerings consistent therewith are flat-out wrong, like in their positive rationale for (and offering of) a market-neutral fund, whose awfulness was easy for any Boglehead to predict (and it certainly has lived up to that expectation).
BTW Vanguard has most of my money, and I am deeply grateful for what they have done for investors, but even this greatest of fund families can become better.
The first point is that companies are not homogeneous entities. Research may think something is a great idea, but product or marketing could nix it.
Companies don't have infinite resources to pursue all possible products, and the have to prioritize and get a consistent marketing message. It might just not fit the VG brand.
Also fund management companies in general should avoid new products that will attract risk-perverse or 'hot' money, 'flavour of the month' investing or expose individual investors, who tend to be unsophisticated and under-diversified and momentum driven, to high risk of loss.
You can see the Business Committee of VG thinking through all the risks of launching such a fund to individual investors, watching money pile in (as it did to commodities in the 70s) from individual investors and, as happened in the 80s, them taking a huge bath. Thus damaging VG's brand and reputation.
VG may come around to offering this, but I don't see it as VG's DNA to be the absolute market leader in new products-- relatively slow to embrace ETFs, I believe, for example.
They are very adverse to the impacts of hot money and momentum investors, as well. So a limited liquidity product would be more appropriate. And there might be significant regulatory obstacles in marketing this to individual investors.
Intellectually I know Bogle is no longer there, but commodities have no inherent return (Soros points this out) so you would be creating an investment product that invests in nothing, in an economic sense. Soros views it as investing sophistry and I suspect Bogle might similarly. The point about commodities markets is to hedge real physical consumers and producers *not* to facilitate financial speculation. See recent fines on the banks in energy trading.
PS I have no doubt that having made this post, VG will shortly announce just such a CCF product . .