Index Funds: John Bogle v. Jeremy Siegel
Via Kirk Report, here’s a debate between John Bogle of Vanguard Funds and Jeremy Siegel of Wisdomtree Investments - Great minds don’t think alike about index funds.
The crux of the argument is how stock indexes are calculated. The Standard & Poor’s 500-stock index, for example, gives the greatest weight to stocks with the largest market capitalization, share price multiplied by shares outstanding. That means stocks with the biggest run-ups have the biggest effect on the index. Investors who bought an S&P 500 index fund in 1999 bought a fund laden with expensive technology stocks and have paid the price ever since. The Vanguard 500 index fund has earned 1% a year since Dec. 31, 1999. Is that just the breaks, or is it a problem with how the index is calculated?
In India, we do have both index (mutual) funds as well as ETFs. Of course, they are nowhere as cost-efficient or liquid as the Vanguard funds.
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