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Bogle Appalled by Funds' Lack of Corporate Oversight

Fund managers to be more vocal regarding the management of companies they own, but there are many conflicts in the way, according to Vanguard's founder.

Christine Benz: One issue that you have been also talking about for a while now is why mutual funds have been so passive about the corporations that they own. Let's talk about that issue and how you think funds should step up and have a greater say in issues like executive compensation or say more about those issues?

Jack Bogle: Yes, executive compensation, and political contributions is another one. Well, I am appalled by what has happened in our industry. You know, when we were a little tiny industry, we owned probably 1% of all stocks when I looked at the industry and maybe 2% back in 1951, doing my Princeton thesis, and now we own 34%. We are the largest holders of stocks. But it's much more than that because you can no longer make a distinction between pension fund managers--institutional money managers--and mutual fund managers. If you look at the top 25 firms, every single one of them is in both businesses.