staythecourse wrote:...BTW, I never hear Mr. Sinquefield (who is with DFA of course) talk publicly in interviews. Does he not give out interviews?
I think he's a prominent politician in... is it Missouri? Yes. So I think he surely must "talk publicly in interviews" about something
. I'm not aware of
much in the way of public statements by Booth, either.
I'm very curious about "sibling rivalry" between Vanguard and DFA but I don't think I'm ever going to have that curiosity satisfied. As noted in the Wiki article on DFA
, Sinquefeld's involvement was in the Samsonite Luggage Fund, a private pension fund, that was originally to hold an equal dollar amount of every stock listed on the New York Stock Exchange. Bogle responds sharply to any suggestions that this was the first index fund, or that the Vanguard 500 Index Fund was merely the first "retail" index fund. His blog here
includes two back-and-forth letters in the Wall Street Journal.
Bogle says, with some justice I think, that the Samsonite fund's equal weight was so ill-conceived, given the technology and trading costs of the era, that it shouldn't count. Bogle writes "That index strategy was a failure. It relied on a price-weighted — not market-cap-weighted — index, and was thus overwhelmed by frequent trading and its attendant transaction costs." It does seem as if someone could have anticipated this before creating the fund.
Even today, there are products that implement an equal-weighted S&P 500 index, but is anyone aware of any that implement equal-weighting farther down into small-caps than the S&P 500?
I've also been curious about the comments in Burton Malkiel's 1973 edition of A Random Walk Down Wall Street
. After the famous passage, "Whenever below-average performance on the part of any mutual fund is noticed, fund spokesmen are quick to point out "You can't buy the averages." It's time the public could," Malkiel then goes on to say that "if the New York Stock Exchange (which, incidentally has considered such a fund) is unwilling to do it..." I'd very much like to know more about the NYSE's considering such a fund.
Charles D. Ellis' article, "The Loser's Game," appeared in 1975.
It seems pretty clear that indexing was "in the air" in the early 1970s.
It also seems pretty clear that the creation of the first index fund was motivated both by its intrinsic merit, but also as a ploy on Bogle's part for sidestepping a contract restriction on what Vanguard could and could not do. Some legal language that restricted the creation of an actively managed mutual fund, the only kind then known, but allowed the creation of an index fund because it did not involve "management." Something like that.
Annual income twenty pounds, annual expenditure nineteen nineteen and six, result happiness; Annual income twenty pounds, annual expenditure twenty pounds ought and six, result misery.