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M* The Dark Side Of Vanguard's Success: A Reader's Argument
FYI: Don Andersen of Red Pine Investment Counsel wasn't enamored with last week's column, which stated that neither Vanguard investors nor the overall stock market should be troubled by Vanguard's record-breaking net inflows. In fact, Mr. Andersen found my article "grossly misleading." Regards, Ted http://news.morningstar.com/articlenet/article.aspx?id=691097
Nutshell: "In short, there has been a lot more behind Vanguard's sales success than the accident of a blue-chip bull market. Among the reasons are discount pricing, clear communications, a cautious fund-launch approach, and unusually strict investment-risk controls. As a result of these practices, Vanguard has developed a reputation as a fund manager that takes unusually good care of its shareholders and that delivers on its promises. It is these attributes, not the providence of a given market sector, that have propelled the company to the top of the charts"
Why I'm there: "Fund investors may at times become overly enthusiastic, but their instincts are reliable. If they favor a fund company, it's because that fund company has delivered on its claims. Vanguard's greatest strength is that it, almost alone of fund companies, establishes expectations that it can consistently meet. In this business, less is indeed more."
Comments
"In short, there has been a lot more behind Vanguard's sales success than the accident of a blue-chip bull market. Among the reasons are discount pricing, clear communications, a cautious fund-launch approach, and unusually strict investment-risk controls. As a result of these practices, Vanguard has developed a reputation as a fund manager that takes unusually good care of its shareholders and that delivers on its promises. It is these attributes, not the providence of a given market sector, that have propelled the company to the top of the charts"
Why I'm there:
"Fund investors may at times become overly enthusiastic, but their instincts are reliable. If they favor a fund company, it's because that fund company has delivered on its claims. Vanguard's greatest strength is that it, almost alone of fund companies, establishes expectations that it can consistently meet. In this business, less is indeed more."