> I think it's plausible that these managers exist, but they're impossible to identify ex ante. Furthermore, a smart manager will charge fees that are equal to the alpha they generate.
I think this is the kernel of what Bogle was saying and Vanguard is now reaping the benefits of.
Old system: active traders beat the market, therefore they charge fees slightly less than the alpha they're supposed to generate
New system: customers are more aware that their active trader(s) may not be the winners, so the acceptable fee to pay the traders decreases to the product of the alpha AND the risk of not picking the right traders
I think this is the kernel of what Bogle was saying and Vanguard is now reaping the benefits of.
Old system: active traders beat the market, therefore they charge fees slightly less than the alpha they're supposed to generate
New system: customers are more aware that their active trader(s) may not be the winners, so the acceptable fee to pay the traders decreases to the product of the alpha AND the risk of not picking the right traders
https://www.zacks.com/stock/news/250937/warren-buffett-on-ac...