Vanguard weighs in: Is active mutual fund management dead?

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Ever Ready
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Vanguard weighs in: Is active mutual fund management dead?

Post by Ever Ready » Tue Jan 03, 2017 12:05 pm

http://www.cbsnews.com/news/vanguard-weighs-in-is-active-mutual-fund-management-dead/

Vanguard chief William McNabb: “Active management can survive ... only if it’s offered at much lower expense. Otherwise active management is dead, and rightly so,” he claimed. “It has never been a winning proposition.”

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TheTimeLord
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Re: Vanguard weighs in: Is active mutual fund management dead?

Post by TheTimeLord » Tue Jan 03, 2017 12:18 pm

Never say never.

As the manager of the Magellan Fund at Fidelity Investments between 1977 and 1990, Peter Lynch averaged a 29.2% annual return, consistently more than doubling the S&P 500 market index and making it the best performing mutual fund in the world.
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qwertyjazz
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Re: Vanguard weighs in: Is active mutual fund management dead?

Post by qwertyjazz » Tue Jan 03, 2017 12:50 pm

Ever Ready wrote:http://www.cbsnews.com/news/vanguard-weighs-in-is-active-mutual-fund-management-dead/

Vanguard chief William McNabb: “Active management can survive ... only if it’s offered at much lower expense. Otherwise active management is dead, and rightly so,” he claimed. “It has never been a winning proposition.”


Do you mean like the low cost active management Vanguard has been selling? :moneybag :oops:
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Re: Vanguard weighs in: Is active mutual fund management dead?

Post by gwrvmd » Tue Jan 03, 2017 1:10 pm

Peter Lynch ran Fidelity Magellan before most investors had a computer and Google. The computer changed the investor world and is now changing the Investment Advisor world.......Gordon
Disciple of John Neff

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TheTimeLord
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Re: Vanguard weighs in: Is active mutual fund management dead?

Post by TheTimeLord » Tue Jan 03, 2017 1:16 pm

gwrvmd wrote:Peter Lynch ran Fidelity Magellan before most investors had a computer and Google. The computer changed the investor world and is now changing the Investment Advisor world.......Gordon


Most certainly the availability of information has changed the world of investing.
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Ever Ready
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Re: Vanguard weighs in: Is active mutual fund management dead?

Post by Ever Ready » Thu Jan 05, 2017 8:15 am

McNab on Bloomberg TV right now.

sid hartha
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Re: Vanguard weighs in: Is active mutual fund management dead?

Post by sid hartha » Thu Jan 05, 2017 1:30 pm

On the topic I found this article interesting.

Title: "Michael Mauboussin: Since the end of 2006, investors have withdrawn nearly $1.2 trillion from active"

http://www.valuewalk.com/2017/01/michae ... on-active/

A poker game certainly gets a lot harder when all the easy marks leave the table.
Last edited by sid hartha on Thu Jan 05, 2017 2:05 pm, edited 1 time in total.

Gropes & Ray
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Re: Vanguard weighs in: Is active mutual fund management dead?

Post by Gropes & Ray » Thu Jan 05, 2017 1:35 pm

The lure of beating the market even draws me, and I have toyed with the idea of using one of Vanguard's managed funds for something like 20% of my equities. I think there is research that suggests managers can beat the market more often than not, but not by enough to cover their fees. If fees were .2, they might have a chance.

AE81
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Re: Vanguard weighs in: Is active mutual fund management dead?

Post by AE81 » Thu Jan 05, 2017 8:45 pm

Is ative mutual fund management dead? It is to me. Even when offered at low cost I don't personally have faith that outperformance will persist. Having said that, I do have trouble reconciling Wellington fund as one example. It is just plain awesome.
Active, passive, or some of each is a personal choice more than a value judgement.

Dieharder
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Re: Vanguard weighs in: Is active mutual fund management dead?

Post by Dieharder » Thu Jan 05, 2017 8:57 pm

I have been investing in the best Vanguard active managed funds for many years now and have made a lot of money compared to their index fund counterparts. The key is not to dilute it by picking several active funds, but to concentrate on the winners. Everyone who has followed Vanguard knows what those funds are.

drummerboy
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Re: Vanguard weighs in: Is active mutual fund management dead?

Post by drummerboy » Thu Jan 05, 2017 9:21 pm

For domestic funds, I think passive can't be beat. Active just continues to prove its weaknesses.

For International Funds.... I'm still up in the air on that one. For example, FMIJX, has a high expense ratio (unless you are with a broker who discounts it), but they are consistently beating things like VEA over a very long time period. Am I concerned about regression to the mean? Yes. But, they have a nice track record at this point.

Let's hope Vanguard helps the industry push active management fee structures to less than .30% over time...

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