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Bogle Thinks Active Funds Will Disappear, ETFs are Too Numerous

Vanguard Founder John Bogle thinks that active mutual funds are “fat, dumb and happy,” according to an profile by Bloomberg. Bogle believes that advisers see active funds as “cash cows” and will milk them dry instead of changing course. As a result, he foresees the end of the active fund era in 25 to 30 years. Bogle also commented on the proliferation of ETFs, with 6,618 worldwide as of mid-February. He fears that that the abundance of choice means that choosing an ETF is potentially as error-prone as stock picking. Bogle argues that the industry is suffering from “too much innovation,” questioning how those innovations have really benefited investors. 

Bogle argued that there is no next-generation Jack Bogle, and that “nobody, nobody, plunges into this battle to build a better industry with any more enthusiasm than I do. . . . Certainly nobody within the industry. Everybody thinks: ‘Kind of, fat, dumb, and happy. Let’s enjoy what we’ve got.’ Because they’re making a lot of money.”