Bogle charges fund industry with leaning on past returns

Investors and the mutual fund industry “give far too much credence to past returns” when evaluating mutual funds, John Bogle said yesterday.
That means that Monte Carlo simulation must be thrown out, Mr. Bogle, the founder of The Vanguard Group Inc. of Malvern, Pa., said in comments during a Q&A with conference attendees at the Morningstar Investment Conference in Chicago, sponsored by Morningstar Inc., which is based in that city.
That is one of many changes that he said that he would like to see when it comes to investing.
Another change would be a “federal standard of fiduciary duty” for all money managers because a number of mutual fund managers are “taking advantage of their position” and not looking out for their shareholders, Mr. Bogle said.
One change he wouldn’t like to see is a move by financial advisers and investors in general away from a buy-and-hold philosophy, something he believes may be under way.
Following a buy-and-hold strategy has worked well for many investors, Mr. Bogle said.
The alternative — market timing — is far too risky, he said.
“The cost of trading is too much,” Mr. Bogle said.

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