Tags: Bogle | Private | Commodity | ETFs

Bogle: Private Commodity ETFs Are Risky

Monday, 10 Oct 2011 07:41 AM

  Comment  |
   Contact  |
  Print   |
    A   A  
  Copy Shortlink
Vanguard founder Jack Bogle says there’s a good possibility that private commodity exchange-traded funds (ETFs) couldn’t deliver the underlying physical commodities if their investors demanded they do so.

“The commodities part of the public ETF market is not that large,” Bogle told CNBC. “It's only a small portion of the public market.”

“When you get over into the private side, individual ETF commodity pools, there’s a huge risk of that. Nobody knows how big ut is because you don’t have disclosure.”

Which is why Kyle Bass and other hedge fund managers have eschewed gold ETFs in favor of buying physical gold.

ETFs are “the major speculative force in the financial markets today ...and the most active stocks on the New York stock exchange by far,” says Bogle. “We now have a VIX (volatility index) ETF, which enables people to speculate on their speculation.”

Bogle says investors need disclosure from these funds about what their fund returns earn and what their investors earn.

Investors do very badly, says Bogle, adding that while Blackrock—which is the largest purveyor of private ETFs—is not engaged in double or triple leverage, it is engaged in a lot of individual country funds.

“Over the last decade these individual country funds have averaged a 10 percent return, but the investors in them have averaged a 4 percent return.”

“They shouldn't be bragging about their returns when they know it's basically like giving a behavioral toy to tempt investors.”

Index Universe reports that more than $2 billion flowed into U.S. ETFs, and total assets rose to $987.28 billion from $967.07 billion last week.

© 2014 Moneynews. All rights reserved.

  Comment  |
   Contact  |
  Print   |
  Copy Shortlink
Around the Web
Join the Newsmax Community
Please review Community Guidelines before posting a comment.
>> Register to share your comments with the community.
>> Login if you are already a member.
blog comments powered by Disqus
 
Email:
Country
Zip Code:
Privacy: We never share your email.
 
Follow Newsmax
Like us
on Facebook
Follow us
on Twitter
Add us
on Google Plus
Around the Web
Top Stories
You May Also Like

Pimco Sees Global Growth Rising in 2015, Boosted by Lower Oil

Thursday, 18 Dec 2014 12:59 PM

Pacific Investment Management Co expects global growth to accelerate in 2015 to around 2.75 percent from around plus 2.5 . . .

'Interview' Ordeal at Sony Just Its Latest Crisis

Thursday, 18 Dec 2014 09:44 AM

How do you say "damage control" in Japanese? Sony Corp. is sealed within a hermetic cone of silence as executives try to . . .

North Korea-linked Sony Hack May Be Costliest Ever

Thursday, 18 Dec 2014 09:23 AM

The unprecedented hack of Sony Pictures which a U.S. official says is linked to North Korea may be the most damaging cyb . . .

Most Commented

Newsmax, Moneynews, Newsmax Health, and Independent. American. are registered trademarks of Newsmax Media, Inc. Newsmax TV, and Newsmax World are trademarks of Newsmax Media, Inc.

 
NEWSMAX.COM
America's News Page
©  Newsmax Media, Inc.
All Rights Reserved