Asness Touts Passive Investing Titan Bogle

Jun 24 2014 | 7:03am ET

Vanguard Group’s Jack Bogle is no fan of hedge funds, but one prominent hedge fund manager is a big fan of his.

AQR Capital Management’s Clifford Asness says he touts Bogle, one of the pioneers of passive, index-based investing—and not his own hedge fund—to family members seeking investment advice.

“The average relative asking for advice, I say, ‘Have you heard of this man Jack Bogle? He’s a very nice man,” Asness told the Morningstar Investment Conference in Chicago.

Asness said he doesn’t agree with Bogle—whom he called “an investing hero of mine”—that markets are “perfectly efficient.” But, he said, “I think it’s a better starting place to believe in Jack Bogle than to believe in eight stocks for many people.”

Asness said he still believes there’s a place for active managers like himself, but that most do not make the grade.

“I’m being cynical without being dismally cynical about this,” he said. “But if you find your average stock picker, I will bet a lot that they think the market is way more inefficient than I do.”

Bogle “would tell you, ‘The averages still can’t beat the average, that’s just math,’” Asness said. “‘And if they charge any fee above and you buy the average active manager, you’re going to lose. You have to buy the right active manager.’ They are not wrong.” 

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