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festivusaziliHamilton Nolan
12/02/15 11:39am
it is effectively becoming a massive wealth transfer machine funneling money out of the financial industry and into individual investors’ accounts

I love that just not giving money to the fabulously wealthy, and instead giving slightly less money to the slightly less fabulously wealthy, is being described as a “wealth transfer machine.” Very interesting choice of words.
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  PeteRRfestivusazili
  12/02/15 11:48am
  A whole bunch of us aren’t wealthy, but we have a small amount (mid-5 figures) invested in the hopes of growing it to help with retirement. Vanguard is for us. The wealthy aren’t sweating investment fees.
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  CaiteeCruellefestivusazili
  12/02/15 11:49am
  When I worked at Vanguard, salaries weren’t particularly spectacular. It was run as a de facto non-profit. I’m not sure who you think “the slightly less fabulously wealthy” are there.
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TRUMP DELENDUS EST (fka Chatham Harrison)Hamilton Nolan
12/02/15 11:32am
Market forces aren’t the cure-all free market fundamentalists seem to believe they are, but they can work. So that’s nice.
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  lewis55number2TRUMP DELENDUS EST (fka Chatham Harrison)
  12/02/15 11:38am
  Right, and one of the basic ideas of market forces is that if someone has consistently found a way to beat the market over a long period of time, everyone else will start doing that thing too, and it will no longer be a way to beat the market. Arbitrage opportunities close, quickly.
  
  Which means: you aren’t going to beat the market over a long period of time, regardless of who you invest with. So just invest in an aggregate index of the market and you’ll get at least the same average returns you’d get in a hedge fund or whatever (if spread out over 30 years, etc).
  
  A wonderful example of this logic is the analysis of Donald Trump’s wealth Forbes did a ways back. Basically, if he took his money circa 1980 and put it in a Vanguard index fund, he’d have a larger fortune now than he actually does. All his brilliant “investing” in real estate has netted him a loss relative to the S&P 500 over the same 35 year stretch. Yet he’s seen as a “great investor” in the press...
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  TRUMP DELENDUS EST (fka Chatham Harrison)lewis55number2
  12/02/15 11:42am
  And that’s a good thing here; I expect that in the long run it will mean the entire financial industry has to reduce its expenses, which means fewer people getting paid ungodly salaries for providing a less effective service.
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BobbySeriousHamilton Nolan
12/02/15 11:27am
My wife works there, they have more money than God.
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  casenBobbySerious
  12/02/15 11:29am
  Well, of course. Why would God need money? ;)
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  sharp dressedBobbySerious
  12/02/15 11:30am
  Does God diversify?
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zingHamilton Nolan
12/02/15 11:37am
I became self-employed about a year ago and at that time I rolled an American Funds 401k into an IRA with them. Would Vanguard be a better choice? AF hasn’t done too terribly, maybe 3-4%, but its a long-term fund, not real aggressive. Whats the average yield with Vanguard?
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  Thidrekrzing
  12/02/15 11:42am
  Vanguard has all kinds of funds, from conservative to balanced to aggressive. The primary difference is that they are generally not actively managed and thus take fewer fees, passing that savings along to you.
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  Straight Up Gayzing
  12/02/15 11:42am
  I’d say Vanguard is about 6-7%. Check out some of their lower cost funds, like Vanguard Large Cap ETF (VV). Expense ratios is .09%, as in, a fraction of 1 percent, which is way way lower than almost anywhere.
  
  Here are some market return rates on that fund:
  
  YTD - 2.81%
  
  5 year - 14.24%
  
  Since inception (2004) - 7.67%
  
  Yeah, they are awesome.
  
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Dave Hamilton Nolan
12/02/15 11:33am
Vanguard: 0.83% less evil and passing the savings on to you.
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  Uncle-Remus-fetusDave
  12/02/15 11:39am
  .83% is a ton of money over time. Indexing is the best.
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  ColonialSaabDave
  12/02/15 11:45am
  No, no, 80.3% less evil and passing the savings along to you.
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GMOCHamilton Nolan
12/02/15 11:50am
I am astonished that the mutual fund industry still exists. ETF’s are great. I guess things like this happen slowly though.

Actively managed funds will have a different beta or risk profile from say an S&P 500 ETF. They significantly underperform the S&P when the market is going down and out perform when it is going up. So they do look like having a fund manager helps...some of the time. and some of the time they look like fund managers hurt performance. And for this they take that 1 or 2% which really adds up over time especially when that money if it was in your account would be compounding and generating more money.

Where having managed investments work and returns increase is when you have billion dollar plus endowments like a Harvard and you can afford to hire your own army of brains to work for you directly. These endowments also tend to invest in non traditional instrument like derivatives etc. that normal people should not mess with.
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  thequesoGMOC
  12/02/15 11:56am
  um, ETFs are mutual funds. They’re just exchange traded so they’re priced and saleable throughout the day, unlike traditional funds which are priced at COB.
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  Be-The-BearGMOC
  12/02/15 11:59am
  Active management can also help by lowering the standard deviation in a well diversified portfolio. ETFs are great but if im allocating assets to emerging market debt for example, i sure as shit dont want to utilize an ETF
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istariHamilton Nolan
12/02/15 11:41am
It is kind of neat that the biggest existential threat to a fundamentally corrupt business model is just another business that decided to rip people off less.

I really want to know, who is Vanguard ripping anyone off, if all of the fees they charge go to the cost of their overheads and any profits are going back to the very people who paid the fees in the first place?

It sounds like it’s literally just as system for people to pool resources in order to maintain their investments collectively and then ensure that any extra funds collected are returned equally to users.

Effectively, it is asking its users to pay for exactly what should be asked of people who use the service: the cost of all the things that run the service in the background. No lining owner pockets. No bribes via a lobbying arm. No disastrous attempts to expand into other services that their users don’t want and so wouldn’t want to pay for the risk.
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  Cherith Cutestoryistari
  12/02/15 12:21pm
  Yeah they aren’t ripping anyone off. Or, at least, not here. I can’t know everything that lies in their soul.
  
  People could track the index themselves I guess. By investing a little bit in various stocks across the S&P index. But that would be really time consuming and I’m completely leaving out the cost of trading.
  
  They provide a super convenient service at a low cost.
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  istariCherith Cutestory
  12/02/15 12:29pm
  Do you know the entry level amount for investment? Like, how big does the chunk of money that I send to them need to be to open my account (whatever the lowest entry-level is)?
  
  I tried finding the answer myself on their site, but couldn’t find an answer and didn’t want to give them all my info (via creating an account) just to find out.
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Richard PunchHamilton Nolan
12/02/15 11:41am
I’d say most entities are more of a threat to Wall Street than Occupy, which is no more than a hobo collective.
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  20 Shades of Grey including PorpoiseRichard Punch
  12/02/15 11:57am
  You are completely clueless about how the world changes. But keep on being you, the rest of us will carry you.
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  Richard Punch20 Shades of Grey including Porpoise
  12/02/15 12:23pm
  Oh really?
  
  That sort of talk tells me you’re an occupier. What do we want? EVERYTHING! When do we want it? NOW! What does that mean? WE DON’T KNOW, NOW HERE’S OUR MEDIA PERSON, WHO IS ACTUALLY A DOG! YAAAAAAY.
  
  Un-focused idiots.
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SuffersfoolsgladlyHamilton Nolan
12/02/15 11:47am
My husband and I have done very, very well with Vanguard over the years. They deserve their good reputation.
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  BrooksRobinsonsGloveSuffersfoolsgladly
  12/02/15 12:08pm
  The market is doing well. Not Vanguard. They just give you a cheap vehicle to get in
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  PedalHeadSuffersfoolsgladly
  12/02/15 12:08pm
  I have my entire retirement portfolio with them and I’ve been troubled by the tax-evading lawsuit that they’re facing. I wanted to believe that they are the one clear straight-shooter out there but it sounds like they have probably been underpaying their taxes forever by being too cute with their valuations and how they sell equities between funds. It’s disappointing but in the world of Big Money, I guess I can’t be surprised.
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littlebobberHamilton Nolan
12/02/15 11:46am
Elizabeth Warren, Bernie, Occupy and now Vanguard. Chip, chip, chip away.
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  ReburnsABurningReturnslittlebobber
  12/02/15 11:56am
  Yeah dude, you’ve got that backwards. Vanguard has been chipping away at Wall Street with more effectiveness than all of those parties combined for longer than even old man Sanders has been at it.
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  littlebobberReburnsABurningReturns
  12/02/15 1:17pm
  Fair enough. The word “now” doesn’t belong.
  
  Elizabeth Warren, Bernie, Occupy and Vanguard. Chip, chip, chip away.
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