Remarks by John C. Bogle, Founder and Senior Chairman
The Vanguard Group
Before "The Q Group" (The Institute for Quantitative
Research in Finance)
Palm Beach, FL
March 29, 1998
In its hell-bent mission to transmogrify the finest investment for long-term
investing ever created into a vehicle for intermediate-termand even
short-termspeculation, the mutual fund industry has implicitly conceded
what knowledgeable observers have long known to be the ultimate reality of
finance: the central task of investing is to realize the highest possible
portion of the return provided by the class of financial assets in which you
investrecognizing that that portion will be
less than 100%.
Simply put, then, the first reality is that investors, as a group, do
not, cannot, and will not "beat the market." And the second reality is that
the overwhelming odds are against any particular mutual fund doing so over
an investment lifetime.
Stated another way, long-term investors must accept the fact that the
fund or funds they select, irrespective of their past performance, will gradually
regress to the mean over time.* But not to the market mean. To the market
mean, reduced by the costs the fund incursadvisory
fees, operating expenses, marketing costs (in all, the "expense ratio"), plus
the cost of buying and selling portfolio securities ("transaction costs").**
And in the world of mutual funds, these costs are extremely large. The annual
expense ratio of the median equity fund is now 1.6 percent, and rising. Transaction
costs are difficult to quantify with precision, but at the high portfolio
turnover rates of the past decade (80% plus), an estimate of 0.5 percent to
1.0 percent hardly seems excessive. "All in" costs, then, can be conservatively
estimated at upwards of 2.0 percent per year.
So the search for the holy grail of market-beating long-term returns
is every bit as frustrating to the fund investor of the 20th Centuryand
will surely be the same, and perhaps even more so, in the 21st Centuryas
the search for the Holy Grail of the Last Supper was to the Knights of King
Arthur's Round Table in the 15th century. And it is for that reason that I
use this search as my theme this evening.
*As I understand it, "regression to the mean" is a phrase of quantitative
art, suggesting that above-market returns will be followed by below-market
returns in a cyclical fashion. However, in my discussion of mutual fund performance,
I define it by its precise words: that the before-cost returns of both above-average
and below-average funds demonstrate a powerful tendency to regress to the
mean of their style categories and to the market mean over time.
**John C. Bogle, "On Reversion to the Mean: Sir Isaac Newton's Revenge
on Wall Street," unpublished speech, 1998.
The Equity Fund Record
Let me first speak of the records of equity mutual funds as a group
in the recent past. And the recent past is particularly relevant, since it
is in that era that equity fund assets have become the largest pool of assets
(nearly 25%) in the stock market, and that mutual fund expense ratios and
portfolio turnover activity have risen to the highest levels in history. Unless
they are to decline materially, the future is almost certain to resemble the
recent pattern. The fact is that in the past 15 yearscoinciding almost
precisely with the great bull marketequity fund annual returns (unadjusted
for survivor bias) have averaged 14.3 percent, providing 86 percent of the
return of the total stock market (Wilshire 5000 Equity Index) of 16.7 percent.
(Note that that gap of 2.4 percent is somewhat larger than my earlier 2.0
percent estimate of fund costs, in part because of the drag of cash reserves).
These undeniable facts about fund returns and costs and the relevance
of past records, of course, have led to the boom in index funds today. "If
you can't beat the marketto say nothing of meet the marketwhy not join it?" And an all-market index fund, operated
at a cost of 0.2 percentone-tenth of the industry normwould
have provided an annual return of 16.5 percentor nearly 99 percent
of the market return during the same period. In fact, the comparison of 99
percent of annual market return for the
index fund and 86 percent for the managed fund conceals a much larger gap
than merely 13 points.
In fact, the terminal value of an
initial investment of $10,000 in the index fund would have been worth $98,800
(97 percent of the market result), while the terminal value of the same investment
in the traditionally managed active fund would have been $74,200, only 73
percent of the market. The increase in the performance gap from 13 percentage
points to 24 percentage points can best be described, not as the conventionally
rosy "magic of compounding," but as the unconventionally ominous "tyranny
I would also add that, in all probability, "you ain't seen nuthin' yet."
For in a market that gives a more modest account of itself(which, we
are sure to see, assuming only that this bull market tree doesn't grow to
the sky)the performance gap gets larger. For example, let's hold costs
constant and take stock market returns down to, say, 8 percent annually over
fifteen years. The result would be a return of 7.8 percent for the index fund
(97 percent of the market return) and but 6 percent for the managed equity
fund (75 percent). And at the end of the period, the $10,000 investment would
be valued at $30,800 in the index fund, a gain of $20,800 (96 percent of the
market return), versus a gain of $14,000 for the costly mutual fund (65 percent).
"Tyranny," as it were, has increased the performance gap from 22 percentage
points to 37 percentage points. It is not a very happy prospect for investors,
for it means simply that the mutual funds, accepted for a half-century as
the holy grail of high performance, have failed the test of time.
Enter the Index Fund
It was looking at historical performance relationships similar to these
(although less unfavorable to the funds) almost 25 years ago that encouraged
me to recommend to the Board of Directors of our newly created (1974) firm
that its first action should be to embark on a newly created concept: In 1975,
we formed the first index mutual fund, modeled on the Standard and Poor's
500 Composite Stock Price Index. Sad to say, I didn't invent the conceptI'd
give the lion's share of the credit for that to William E. Fouse and his colleagues
at Wells Fargo Bankbut I was a believer, even a missionary, in the
concept, and was confident that it couldagainst all oddsbecome
a reality in the world of mutual funds.
In the early years, there was lots of joking about the first index mutual
fund. "Index funds are un-American," "Bogle's Folly," and "seeking mediocrity," were hardly the worst things that were said. But, after a shaky start
(mediocre relative returns during its first five years), and minuscule
assets (just $90 million in 1980), our 500
index fund turned on its jets, and became both an artistic success
(even better 15-year returns, given its large-cap bias, than those of
the total stock market) and a commercial success (now the second-largest
fundand, with a companion institutional portfolio, the largest
fundin today's burgeoning mutual fund industry).
And, as the performance data indicated earlier show, it is no longer
a competitive joke. Although uncopiedeven shunnedfor a full
decade, it has now been joined by some 120 competitive index funds: few have
been formed by missionaries (or converts, and "there's no one more religious
than a convert"), but most by opportunistic no-load firms, "eating crow" and
draggedkicking and screaming, and with considerable misgivinginto
the fray by the institutional 401(k) savings plan market. While 42 have reasonable
expense ratios (0.25 percent or less), most of those are the result of temporary
fee waivers; 20 have unacceptable ratios of 0.75 percent or more; and an appalling
25 even charge sales loads or 12b-1 fees. (They don't seem to realize that
minimal cost accounts for virtually all of
the index advantage.) About two-thirds of the U.S. equity funds are targeted
against the S&P 500 Index.
The Industry's Response to Indexing
The indexing concept is much broader than a single index fund, however.
First, true indexing works best against the total stock market, and the all-market
fund is only at the beginning of its acceptance. Second, for investors who,
for one reason or another, seek to earn higher returns in specific broad market
sectors, funds modeled on growth indexes and value indexes, as well as small-cap
and mid-cap indexes, are now available. It is only a matter of time until
someone has the good sense to offer index funds that match each of the nine
Morningstar style/market-cap boxes. The record is crystal clear that index
funds would have produced highly effective risk-adjusted returns in each.
Index funds are in the incipient stage, too, in the bond market and the international
market. As they must be, by definition, they are equally effective.
So, indexing is threatening to become the new holy grail for fund investors,
and it should be. Yet, if investors increasingly see the merit of indexing
strategies as a means to outpace the long-term returns of individual fundsa
point that the data abundantly demonstratehow, finally, can sponsors
of traditional funds compete? Material cuts in the fees they charge seem out
of the question, for such actions would slash their profits unmercifully.
Reducing portfolio transaction costs is also unlikely. It would result in
unacceptably radical changes in today's silly, but chic, high-turnover investment
policies. Hence the answer: create a new holy grail!
The idea now seems to be to offer investors a new mantra: actively manage
your own fund portfolio. Don't own a fund for the long-term. Dash to the transaction
cost-free (or so it is incorrectly alleged) fund supermarkets. Exercise your
freedom of choice. Treat funds as stocks. Switch and (or so it is suggested)
get rich. Pay attention to the drumbeat of advertising for those handsome
past performers (the only funds that are advertised) whose names you see on
your television screen. This grotesque transfiguration of the long-term nature
of fund investing is what is now coming to pass.
But does it work? Are there methods for selecting and swapping mutual
funds that might result in superior returns? Are there strategies that have
worked in the past? Well, on the first point, the ability of the computer
to spit out endless performance comparisons, multiple regressions, and complex
formulas has enabled academia to test, well, everything. There may be a lot of "data mining" involved in what is duly recorded on this
subject in The Journal of Finance, The Journal of
Portfolio Management, the American Economic Review, and the like.
But persistent past factors that may (or may not) be valuable in selecting
funds that will provide superior future returns is on the agenda of scores
of respected academics.
Selecting Winning FundsAcademic Evidence
What have they found? Let's examine a few examples. We'll start with
the mutual fund king of the academic profession, Professor William F. Sharpe
of Stanford and his analysis of large seasoned U.S. mutual funds (1995).***
He has carefully examined the 10-year records of the 100 largest funds (measured
each year), accounting for more than 40% of the assets of all funds, and calculated
their returns relative to the returns of comparably weighted market sector
indexes, including a U.S. Treasury bill component (therefore eliminating the
negative effect of the persistent performance lag created by fund cash positions).
He properly acknowledges that the cost-advantage ascribable to large funds
probably provides superior returns to this group, but they nonetheless fell
short of the multi-index return by 0.64% per year on average over the past
decade. While the shortfall could not be deemed significantly different from
zero, the data do undermine the belief that a typical active equity fund will
outperform the passive alternative. The data would be even more damning if
Sharpe had included sales charges.
Sharpe then examines the value that some of these managers have added
by their apparent stock selection ability over prior periods, and relates
that to their future success. He investigates common measures for judging
fundssize, past performance, and Sharpe Ratios. His best evidence of
performance persistence showed that, using the results for the previous 12
months, if you held the top 25 funds in his studythe first quartileover
the subsequent five- and ten-year periods, you would have added an annual
return of 0.8 percent relative to the index return; in the bottom quartile,
you would have lost 0.5 percent per year over the five years and lost 1.3
percent annually over the ten years. Even disregarding the extra taxes incurred
by switching funds regularly, this seems to form a pretty shaky basis for
an investment strategy.
Do winners repeat, then? Sharpe summarizes his results with these conclusions: "If the past ten years are indicative of the next ten, one might answer in
the affirmative." (Although, I would note, the positive margin is modest to
a fault.) However, perhaps a neutral ("not proven") position is appropriate,
for "the evidence is far from conclusive, statistically or economically."
Mark Carhart (1997) of the University of Southern California has also
tackled the issue of persistence in fund performance, evaluating 1,892 diversified
equity funds over 16,109 fund years (amazing!) from 19621993.+ First,
he finds that "common factors in stock returns (high beta vs. low beta, value
vs. growth, large cap vs. small cap) and investment expenses almost completely
explain persistence in equity fund returns." Properly adjusting for the customary
failure to consider the effect of the subaverage returns of funds that have
gone out of existence, he confirms Professor Burton Malkiel's conclusion that
survivor bias has enhanced past annual returns reported for funds by about
1.5% per year. Malkiel found some evidence of persistence during the 1970s,
but none during the 1980s.++
Looking at past one-year returns relative to those of the subsequent
year, Carhart concludes, among other things, that relatively few funds stay
in their initial decile ranking, although funds in the top and bottom deciles
maintain their rankings more frequently than expected17 percent in
decile 1 and 46 percent in decile 10, doubtless because many low-decile funds
tend to be trapped there by high costs. (10 percent in each decile would be
the random expectation.) In his conclusion, he warns: "while the popular press
will no doubt continue to glamorize the best-performing mutual fund managers,
the mundane explanations of strategy and investment cost account for almost
all of the important predictability of mutual fund returns."
In a third study, William Goetzmann and Roger Ibbotson (1995) tested
the repeat winner hypothesis over two-year, one-year and monthly intervals
from 19751987.+++ For all periods, they ranked equity mutual funds
in terms of both raw returns and risk-adjusted returns (alpha), and split
them into two categories: "winners" (top 50%), and "losers" (bottom 50%).
Their analysis indicated that investing in winners slightly increased the
chance of outperforming the return of the all-fund average in the subsequent
By way of example, their study of growth mutual funds over two-year
periods revealed that past top performers had a 60% chance of being winners
over the subsequent two years. Therefore, one might conclude that the chance
of a fund being better than average in all four subsequent two-year periods
would have been about one-in-ten. Exceeding the average fund return in each
two-year period, in short, was hardly an odds-on wagerand the odds
would get far worse if sales charges and taxes had been taken into account.
To complicate matters, since funds as a group lag the market over the
long term, even consistent winners might be losers relative to the market
index. Indeed, Goetzman and Ibbotson concede that picking winnerseven
when defined as those funds in the top quartile in performancemay not
be enough to beat the market. They conclude, "while the 'repeat winner' pattern
may not be a guide to beating the market, it does appear to be a guide to
beating the pack over the long term." In the face of index fund competition,
then, to what avail is a strategy that relies on the tenuous persistence of
***William F. Sharpe, "The Styles and Performance of Large Seasoned
U.S. Mutual Funds, 19851994," published on the World Wide Web, 1995.
+Mark M. Carhart, "On Persistence in Mutual Fund Performance," The Journal
of Finance, Volume LII, No. 1, March 1997, pages 5782.
++Burton G. Malkiel, "Returns from Investing in Equity Mutual Funds
1971 to 1991," The Journal of Finance, Volume L, No. 2, June 1995, pages 549571.
+++Stephen J. Brown and William N. Goetzmann, "Performance Persistence,"
The Journal of Finance, Volume L, No. 2, June 1995, pages 679698.
Selecting Winning FundsReal World Evidence
With that background from the theoretical world of academia, let's look
at fund selection in the real world of industry practice. Let's consider:
(1) the actual records of the funds that did beat the market over the past 15 years; (2) the actual records of investment advisers that recommend
mutual fund portfolios; and (3) the actual records
of "funds of funds" that invest solely in mutual funds.
Over the past 15 years, as I noted at the outset, the average managed
mutual fund has provided only 86% of the annual return of an unmanaged total
stock market index. But the fact is that of the 272 general equity funds that
survived that period (this was a far smaller industry in 1982!), there were
41 that succeeded in outpacing the index return of 16.7%. The investor's odds
of picking a winner, therefore, were about one in seven. But only nine of
those 41 (3 percent of the total) did so by a margin of 1.5 percentage points.
If we assume that the funds' annual tracking error relative to the index was
a fairly modest 3%, then a return of 1.5% in excess of the index return would
represent statistically significant outperformance. In fact, only one of the
funds leaped the hurdle of statistical significance (although, in fairness,
two others came close).
A bit of micro-analysis shows these nine funds to be a rather motley
group. Three carved out their entire long-term margins in the early years,
when their assets were small, and have been mediocre performers for years.
That leaves six legitimate top performers. Interestingly, and importantly,
all six had the same portfolio managers throughout all or most of the period
(though their average age is now 60); three closed to new cash flow before
assets reached $1 billion. In any event, suffice it to say that the nine winners
could not have been easy to identify in advance, simply because the evidence
is clear that they were not identified in advance by very many investors.
(Their aggregate 1982 assets totaled but $1.4 billion, only 3% of total equity
fund assets.) Today, would you select one of the three (what I might have
the temerity to call) legitimate champions which remain open to investors?
You can decide for yourselves.
Next, let's examine the public records of advisers who recommend mutual
funds. For the past five years, The New York Times
has published, regularly each quarter, the records of the equity fund portfolios
selected and supervised by five respected expert advisers. During this period,
not one of them has come close to matching the record of the market index
fund chosen by the Times as the appropriate
comparative standard. The average adviser's annual return of 13.7% provided
70%, the index fund 99% of the return of the market. In fairness, some of
these advisers chose portfolios that were slightly less risky (less volatile)
than the market. Still, providing 70% of the market's return during a period
when even the average fund provided 80%
suggests that selecting winning funds is hardly bereft of challenges.
Another, longer-run evaluation of the success of advisors in selecting
fund portfolios is the Hulbert Financial Digest. It
reports that, of the 59 advisory letters that have been tracked for a full
decade, the portfolio of the average adviser provided a return of +9.5%, or
the same 70% of the return earned by the Times
group. Only eight letters outpaced the market with their recommendation, interestingly,
the same one-in-seven chance for the funds themselves over the past 15 years.
While many of these advisers recommended (for better or worse, during this
bull market era) portfolios far more conservative than the stock market itself,
on average they carried a market risk. Measured by their Sharpe Ratios, their
risk-adjusted return amounted to just 58% of the market's. So, the accumulated
evidence regarding the ability of the experts to select winning funds remains
The third real-world test we might consider is a review of the actual
records of "funds of funds"mutual funds that select other mutual funds
for their portfolios. And this record, as it happens, is the most deplorable
of the lot. For these funds not only lag the marketafter all, six of
every seven funds, as we know now, have done thatbut
they seriously lag even the style categories of the funds in which they invest,
in part because of the extra layer of costs they almost universally add. For
example, of the 11 funds-of-funds investing in large blend (value and growth)
funds last year, five ranked in the 9899100th percentile (one
was dead last), and five in about the 90th, with the champions, as it were,
ranking in the 67th percentile. In all, the 74 funds with full-year records
in 1997 achieved about what might have been expected by random selection of
funds and an added layer of costs: an average 75th percentile standing among
their fund style peers.
Here, I have had to rely primarily on one year data, short as it is,
because so few funds-of-funds have been around very long. (Only 27 have a
three-year return; they averaged a 72nd percentile ranking). A decade ago,
there were but nine. There the record is a bit better: a 60th percentile average.
But excluding the single fund that did not
add a layer of extra expenses (23rd percentile), the average quickly drops
down to the 66th percentile, a neighborhood, if hardly posh, that is surely
familiar, based on my earlier numbers. Moreover, remember that this is the
66th percentile among a collection of funds most of which have themselves
failed to outpace the market.
To make matters worse, I believe that it would be optimistic to expect
that a 66th percentile rank to be sustained. Those funds-of-funds that bear
an extra layer of fees add about 1.5 percent to the expenses of the underlying
funds, which themselves have expense ratios of a comparable magnitudebringing
total annual costs to the three percent range. Such an extra deductionassuming
even their managers, on average, pick average fundsshould produce about
a 90th percentile rank. In any event, it would take naïveté to
undreamed of heights to believe that such a heavily loaded package of funds
could outpace appropriate market indexes.
No Holy Grail HereAcademic or Pragmatic
So, whether we consider academic studies, which I can only presume tried
many tests of predicting future returns that were found wanting and were never
published, or the pragmatic and unforgiving actual results of the funds with
the best long-term records, the funds selected by advisory newsletters, or
the funds selected by funds-of-funds, the odds of selecting future top performers
based on past statistics are poor. The chances, then, of successfully locating
the holy grailidentifying in advance future
superior performersseem dismal to a fault.
Before this day of sophisticated return attribution on a factor basis
and performance evaluation on a relative basis, equity mutual funds with the
best sustained long-term records represented the holy grail of performance.
In recent years, the acceptance of this thesis has been endangered by the
considerable artistic successthe clear performance superiorityof
the index fundand, in very recent years, by its so-far modest commercial
success. (Index funds now account for about 6% of the assets of all equity
funds.) The industry has, at least implicitly, mounted a counterattack. If
only the rare fund can hope to go toe-to-toe with the market on a long-term
basis, let's abandon the conventional buy-and-hold fund strategy and switch
opportunistically among funds to gain an edge. Leave aside what I hope is
the self-evident fact that, while some investors may succeed in doing so,
the eternal thesis under which investors as a group
must underperform the market by the amount of their costs remains, as it must,
firmly in place.
The Quantitative Question
That said, being well aware that you here tonight represent a whole
new, nontraditional approach to investing, I owe you a comment about whether
your quantitative strategies are likely to enable you to carve out an edgea
positive alpha, as it wereat the expense of money managers following
traditional investment research and security analysis techniques. Here, I
bring you both bad news and good news.
The bad news first: I do not believe that, over time, quantitative strategiesas
a group, although it is a group composed of an incredibly wide range of multifaceted,
independent, imaginative, unusually brilliant (I mean it!) practitionerswill
outperform traditional strategies. In the United States, markets are becoming
more efficient, almost daily it seems, an efficiency that now is well on its
way to permeating the small-cap segment as clearly as it has permeated the
large-cap segment. And international markets seem to make up with excessive
transaction costs what they lack in relative efficiency. And, of course, the
eternal bugaboo: to the extent that particular quantitative strategies do provide sustained superiority for a time, they
will attract massive dollars that ultimately vitiate success, and make the
pervasive likelihood of mean regression (a tendency that affords many of you
the opportunity to earn a living) into a virtual certainty.
Now to the good news: even if your quantitative strategies
are unlikely to defy the odds, your funds and private clients
have a good opportunity to outpace traditional approaches. That, it seems
to me, is because your investment costs are but a fraction of those that are
encountered by traditional firms. You don't need offices populated with high-powered
security analysts, research directors, strategy specialists, or policy committees,
nor a compliance apparatus to assure the avoidance of insider information.
But you must be wise, maintaining asset size that comports with your trading
strategies, and holding your fees to reasonable levels (two disciplines almost
totally shunned by the giant mutual fund industry). If you share with your
clients some of the economies of scale you will enjoy as you grow in a controlled
fashion, earning merely competitive gross returns will enable you to provide
at least marginally superior net returns. Compounded over time, that edge
will result in immensely superior capital accumulations for your clients.
But if there is a holy grail here, it is apt to be found only at the margin.
So, I'm optimistic about "quants," and just as much a believer as I
was twelve years ago, when we formed Vanguard Quantitative Portfolios,
the first mutual fund managed on the basis of quantitative, disciplined,
computer-directed investment techniques. In 1986, we were convinced
that we could parlay our pioneering foray into the index fund arena
to a higher level. Even though our original brand name has been sort
of changed into a bland nameVanguard
Growth and Income Portfoliothat hardly suggests its still
distinctive mission, I can report that "Quant" (as we still call it
at the office) is alive and well.
The term "mission completed" is rarely applied to a mutual fundnor
should it ever be. But, so far, at least, "mission successful" is a fair enough
description. The fund has succeeded in outpacing its target index, the Standard
& Poor's 500. If the margin is skinny, it is nonetheless there: 0.06 percent
per year, net of all transaction costs and an expense ratio averaging 0.50
percent. That may seem but a trivial accomplishment, and perhaps it is, although
it has outpaced our Index 500 Fund by 0.3 percent. But, in healthy measure
because of the hefty costs in this over-priced industry, Quant's annual net
return of 17.5 percent in the 12 years since its inception ranks it in the
3rd percentile among its peers. Its fourth-place rank among all 121 growth
and income mutual funds (that's all that have existed for the full period)
is a tribute to Franklin Portfolio Associates of Boston, the external manager
we initially selected to run Quant, and that manages it to this day.
But our convictionso far, rarely shared by others in this industryabout
the value of quantitative strategies is also manifested in the fact, quietly
and without fanfare, that our own Core Management Group has been managing
portions of three of our existing funds, one of them for six years now, one
for four, and a fourth fund (in its entirety) for nearly three years. If our
success has been uneven, I think it is nonetheless fair also to describe our
own foray into quantitative strategies at this early stage as "mission successful." And I look with enthusiasm for quantitative strategies to become an increasingly
important weapon in our arsenal. Nonetheless, it would require more imagination
than I can muster to envision it ever having the impact on our firm of our
pioneering foray into index funds in 1974. Today we manage 26 index and index-oriented
funds, constituting one-third of our $350 billion asset base.
Let me sum up briefly by returning to my initial theme. The traditional
investor strategy of holding mutual funds for the long term has not provided
the holy grail of market-superior returnsnot by a long shot. The index
strategy, by definition, must provide less-than-market returnsbut only
by a slight margin. That is what the real search for the holy grail is all
aboutachieving as close to 100% participation in market returns with
a diversified investment portfolio as is possible. After all, mutual fund
managers are mere mortals, operating in highly efficient markets. Maximum
participation is about as good as it is likely to get for the long-term investor.
The bogus fund-switching strategy in vogue today, implicitly designed to counter
the index strategy by misleading investors into thinking that they can individually
somehow outfox the market is certain (I choose that word carefully) to be
a loser's game. And funds-of-funds attempting to emulate the result of a long
term buy-and-hold index fund strategy, to say nothing of a buy-and-hold mutual
fund strategy (which fails largely in ratio to its 2 percent annual cost)
by adding a cost of 1.5 percent or more,
simply defies all reason. You've just seen the evidence of the past on this
So, that leaves the unconventional quantitative strategies you have
espoused with reasonable success so far: If you do not learn from the mistakes
committed by your traditional peersmost notably carrying excessive
costs and growing fat with unbridled asset growth (and unbridled profit growth
to the adviser), yours may well be "mission impossible," too. The holy grailor
at least a holy grailis there for you to find. If only you take one
small step for a managerdisciplineyou will have taken one giant
step for your investors. The golden ruleputting the client firstis
the eternal holy grail we should all be seeking.
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