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Bogle: Investors Have Tough Time with ETFs

For many investors, the proliferation and tradability of ETFs serves as an unnecessary diversion to an otherwise sound investment program, says the Vanguard founder and former chairman.

Benz: I know that you have been an outspoken critic of the proliferation of ETFs, especially the very narrowly focused ETFs, but I think someone could step back and say, well there are arguably some tax benefits of equity ETFs anyway, and now that investors can trade commission free in some cases, why are they so bad? If I buy a total market ETF, why is that a negative?

Bogle: Well, there is no reason in the world that buying a total stock market ETF and holding it for the rest of your life is a bad idea. At least at Vanguard, you are going to pay the same six or seven basis points that you'd pay if you had over $10,000, which I think is the threshold now for Admiral shares, you'd pay the same price for not having the ETF.