John Bogle, founder of The Vanguard Group Inc., is being challenged to put his money where his mouth is with regard to index-based investing.
John Bogle, founder of The Vanguard Group Inc., is being challenged to put his money where his mouth is with regard to index-based investing.
The gauntlet was thrown down by active money manager Roger Schreiner, chief executive of Schreiner Capital Management Inc., who wants to take on the longtime critic of market-timing strategies in a money management competition.
“Mr. Bogle is sincere and has noble ambitions, but I believe his unwavering faith in the markets is misplaced,” said Mr. Schreiner.
According to the terms of the bet Mr. Schreiner is proposing, he would put up $100,000 against a matching amount from Mr. Bogle. The bet is that Mr. Schreiner can outperform through active management any portfolio Mr. Bogle is willing to hold passively. The time period can be set by Mr. Bogle, as long as it is at least one year.
During the contest period, no management fees would be charged against Mr. Bogle's portfolio, but Mr. Schreiner would deduct a 2% annual management fee, in addition to all transaction costs.
The winning portfolio must have both higher return and lower risk, based on total return and standard-deviation calculations. The winner of the challenge could keep his money, but the loser would have to donate $100,000 to the winner's favorite charity.
While Mr. Bogle is not jumping at the challenge — he could not be reached for comment for this article, nor has he responded to Mr. Schreiner's request — the latter has set aside $1 million to take on up to 10 other passive investors in separate $100,000 wagers.
“Whenever I hear somebody bash market timing, I send them a copy of the Bogle challenge,” he said. “So far I've done that about 20 times, and I've never gotten a response yet.”
