John Bogle Is Wrong About ETFs

John Bogle is wrong.

The founder of the index fund giant Vanguard took to the editorial pages of the Wall Street Journal just before the weekend to denounce exchange-traded funds for "their overlay of costs, limited diversification and short-term trading strategies."

These ETFs, which are booming in popularity among investors, trade all day on the market like regular shares, and they invest their money in a passive basket of stocks. Bogle said ETFs were inferior to regular index funds -- first pioneered by Vanguard -- where you invest directly with the company and which are traded just once a day. These, he argued, offer inexpensive diversification and a long-term "buy and hold" strategy. ...