In a hard-hitting article, includingeven harder-hitting quotes from Vanguard founder Jack Bogle, MarketWatch writer Paul Farrell takes on the mutual fund industry-- declaring that investors are losing in this casino and that indexing is beating the tar out of active management.

The following Bogle quote will likely leave some fund executives with stomach aches:

“The mutual fund industry is now the world’s largest skimming operation, a $7 trillion trough from which fund managers, brokers and other insiders are steadily siphoning off an excessive slice of the nation’s household, college and retirement savings.”

The article follows closely another key point in Bogle's analysis of the industry: “Investors earn a net return, after all of the costs of our system of financial intermediation.”

Of course, Bogle's argument is slightly self-serving. All of his points lead to this conclusion: In the real world of games, indexing beats actively managed funds.

The MarketWatch article levels even more blows against the industry. To read them all, go to the article on the MarketWatch website. 

Edited by: Tommy Fernandez


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