Fund Lessons From John Bogle

A year and a half of research on the subject of mutual funds brought him to the conviction that these funds should be mutual in reality as well as spirit. Vanguard would stake its banner as a champion of shareholders and their interests.

Today, Vanguard is the No. 2 fund family in the nation. Aside from being a leader in the mutual fund universe, the company boasts nearly 40 ETF instruments including the Vanguard MSCI Emerging Markets Index USD (VWO), Vanguard Total Stock Market ETF (VTI) and Vanguard Financials ETF (VFH).

Again and again, the appeal of Vanguard has been to the sense and sensitivity of its shareholders. What they preach is keep it simple, keep it straight and keep the costs down. As the financial universe has expanded to include flashy, fast growing funds, Bogle and Vanguard have stuck to their guns by providing simple, low-cost instruments that ensure investors with strong, stable returns for the long term.

By keeping the interests of the individual investors at the forefront of every action, The Vanguard Group and Bogle have become the conscience of the mutual fund and ETF industries.

Financial institutions and individual ETF investors alike can take something from the Bogle and Vanguard story. Today, the government is constantly breathing down the necks of ETF companies that offer high leveraged, complex ETFs such as Direxion Financial Bear 3X (FAZ); Direxion Financial Bull 3X (FAS); and United States Natural Gas (UNG) due to their underperformance and excessive risk.

Meanwhile, the low-cost, simple ETFs and mutual funds such as the ones offered by Vanguard have provided investors with comfortable returns over the same period.

At the time of publication, Dion did not have any holdings in the funds mentioned in the article.

Don Dion is president and founder of Dion Money Management, a fee-based investment advisory firm to affluent individuals, families and nonprofit organizations, where he is responsible for setting investment policy, creating custom portfolios and overseeing the performance of client accounts. Founded in 1996 and based in Williamstown, Mass., Dion Money Management manages assets for clients in 49 states and 11 countries. Dion is a licensed attorney in Massachusetts and Maine and has more than 25 years' experience working in the financial markets, having founded and run two publicly traded companies before establishing Dion Money Management.

Dion also is publisher of the Fidelity Independent Adviser family of newsletters, which provides to a broad range of investors his commentary on the financial markets, with a specific emphasis on mutual funds and exchange-traded funds. With more than 100,000 subscribers in the U.S. and 29 other countries, Fidelity Independent Adviser publishes six monthly newsletters and three weekly newsletters. Its flagship publication, Fidelity Independent Adviser, has been published monthly for 11 years and reaches 40,000 subscribers.

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