Bogle on Mutual Funds

(Critical Survey of Contemporary Fiction)

BOGLE ON MUTUAL FUNDS: NEW PERSPECTIVES FOR THE INTELLIGENT INVESTOR is a comprehensive survey of mutual fund investing designed to acquaint investors with basic principles and problems and to aid decision-making about asset allocation. Carefully avoiding the names of individual funds, John Bogle classifies the major fund types, explores their risks and rewards, and offers detailed analyses of the historical performances of each. An investor with a long time-horizon, Bogle limits his explanation of technical terms, such as Beta and ExMax, to those of interest to long-term investors. Along with numerous charts, the book includes scores of insets labeled “Caveat Emptor,” designed to explain investment pitfalls to the unwary and to illuminate the finer points of the principles he upholds.

In the book, Bogle fleshes out the investment strategies that he has long advocated: diversification, investments for the long term, the use of index funds for both stocks and bonds, and the selection of fund family with low management expenses. A major critic of the industry, he particularly objects to its fee structures and its business practices that diminish investors’ returns. While many specialists disagree with Bogle on such matters as the merits of market timing, the thoroughness of his analysis places the burden of proof on them.

Long known for his lucid and elegant style, Bogle employs apt literary allusions in explaining the subject. The epilogue alone, “Twelve Pillars of Wisdom,” a succinct treatment of his major principles, makes the book a worthwhile experience. It is likely to become the classic study of open-end fund investing.