Edward Morris
- Published in print:
- 2015
- Published Online:
- May 2016
- ISBN:
- 9780231170543
- eISBN:
- 9780231540506
- Item type:
- chapter
- Publisher:
- Columbia University Press
- DOI:
- 10.7312/columbia/9780231170543.003.0006
- Subject:
- Business and Management, Business History
The chapter describes the founding of the Vanguard mutual fund company by Jack Bogle and development of index funds.
The chapter describes the founding of the Vanguard mutual fund company by Jack Bogle and development of index funds.
Matthew P. Fink
- Published in print:
- 2008
- Published Online:
- January 2009
- ISBN:
- 9780195336450
- eISBN:
- 9780199868469
- Item type:
- chapter
- Publisher:
- Oxford University Press
- DOI:
- 10.1093/acprof:oso/9780195336450.003.0006
- Subject:
- Economics and Finance, Macro- and Monetary Economics, Financial Economics
Well before the start of the bear market of the 1970s people in the fund industry, at the SEC, in academia, and elsewhere had thought of new types of funds and of new ways to distribute fund shares ...
More
Well before the start of the bear market of the 1970s people in the fund industry, at the SEC, in academia, and elsewhere had thought of new types of funds and of new ways to distribute fund shares to investors. But the industry was doing so well with its traditional product, stock funds, and its traditional method of distribution, broker-dealers, that no one implemented these ideas. The bear market changed everything, and led to the creation of tax-exempt funds and index funds, funds' use of advertising, and the use of fund assets to pay for the distribution of fund shares.Less
Well before the start of the bear market of the 1970s people in the fund industry, at the SEC, in academia, and elsewhere had thought of new types of funds and of new ways to distribute fund shares to investors. But the industry was doing so well with its traditional product, stock funds, and its traditional method of distribution, broker-dealers, that no one implemented these ideas. The bear market changed everything, and led to the creation of tax-exempt funds and index funds, funds' use of advertising, and the use of fund assets to pay for the distribution of fund shares.
Matthew P. Fink
- Published in print:
- 2011
- Published Online:
- January 2012
- ISBN:
- 9780199753505
- eISBN:
- 9780199918805
- Item type:
- chapter
- Publisher:
- Oxford University Press
- DOI:
- 10.1093/acprof:oso/9780199753505.003.0006
- Subject:
- Economics and Finance, Macro- and Monetary Economics, Financial Economics
Well before the start of the prolonged bear market of the 1970s, people in the mutual fund industry, at the Securities and Exchange Commission, in academia, and elsewhere thought about the creation ...
More
Well before the start of the prolonged bear market of the 1970s, people in the mutual fund industry, at the Securities and Exchange Commission, in academia, and elsewhere thought about the creation of new types of mutual funds and new ways to distribute fund shares to investors. But these ideas did not get off the ground. The fund industry was doing so well with its traditional product, equity funds, and its traditional distribution system, broker-dealers, that no one sought to create new types of funds and distribution systems. The bear market changed everything. Clearly, it was time to put these ideas into practice. This chapter focuses on these ideas, which include tax-exempt funds, index funds, and advertising.Less
Well before the start of the prolonged bear market of the 1970s, people in the mutual fund industry, at the Securities and Exchange Commission, in academia, and elsewhere thought about the creation of new types of mutual funds and new ways to distribute fund shares to investors. But these ideas did not get off the ground. The fund industry was doing so well with its traditional product, equity funds, and its traditional distribution system, broker-dealers, that no one sought to create new types of funds and distribution systems. The bear market changed everything. Clearly, it was time to put these ideas into practice. This chapter focuses on these ideas, which include tax-exempt funds, index funds, and advertising.
William Lazonick and Jang-Sup Shin
- Published in print:
- 2019
- Published Online:
- January 2020
- ISBN:
- 9780198846772
- eISBN:
- 9780191881770
- Item type:
- chapter
- Publisher:
- Oxford University Press
- DOI:
- 10.1093/oso/9780198846772.003.0005
- Subject:
- Business and Management, Corporate Governance and Accountability
This chapter explains historical and systemic sources of institutional activism. Starting from re-examining underlying principles of New Deal financial regulations established in the 1930s that ...
More
This chapter explains historical and systemic sources of institutional activism. Starting from re-examining underlying principles of New Deal financial regulations established in the 1930s that discouraged institutional activism, it argues that they were overturned in the 1980s and 1990s in the name of promoting “shareholder democracy.” It analyzes these misguided regulatory “reforms” including the introduction of compulsory voting by institutional investors, a proxy-voting rule change that greatly facilitated aggregation of proxy votes by predatory value extractors. The chapter argues that those reforms created a large vacuum in corporate voting because, contrary to the ideal of shareholder democracy and particularly with the increasing dominance of index funds, institutional investors had little ability and incentive to vote the shares in their portfolios. The main beneficiaries of these reforms have been the leading proxy advisory firms and a small group of hedge-fund activists intent on looting the business corporation.Less
This chapter explains historical and systemic sources of institutional activism. Starting from re-examining underlying principles of New Deal financial regulations established in the 1930s that discouraged institutional activism, it argues that they were overturned in the 1980s and 1990s in the name of promoting “shareholder democracy.” It analyzes these misguided regulatory “reforms” including the introduction of compulsory voting by institutional investors, a proxy-voting rule change that greatly facilitated aggregation of proxy votes by predatory value extractors. The chapter argues that those reforms created a large vacuum in corporate voting because, contrary to the ideal of shareholder democracy and particularly with the increasing dominance of index funds, institutional investors had little ability and incentive to vote the shares in their portfolios. The main beneficiaries of these reforms have been the leading proxy advisory firms and a small group of hedge-fund activists intent on looting the business corporation.
Daniel Haberly and Dariusz Wójcik
- Published in print:
- 2022
- Published Online:
- June 2022
- ISBN:
- 9780198870982
- eISBN:
- 9780191914102
- Item type:
- chapter
- Publisher:
- Oxford University Press
- DOI:
- 10.1093/oso/9780198870982.003.0009
- Subject:
- Economics and Finance, Financial Economics
While contemporary technological disruption is increasingly conceptualized in terms of the logic and paradoxes of the digital platform economy, discussions of FinTech have only engaged to a limited ...
More
While contemporary technological disruption is increasingly conceptualized in terms of the logic and paradoxes of the digital platform economy, discussions of FinTech have only engaged to a limited extent with these debates—particularly from an economic geographic standpoint. This chapter fills this gap by extending the Global Financial Network (GFN) framework to problematize the organizational and geographic logic of the digital platform economy in finance, and applying it to examine the impact of the digital platform model on asset management. It shows that asset management is being profoundly disrupted by what we dub digital asset management platforms—or DAMPs—which encompass services including index fund and ETF provision, robo-advising, and analytics and trading support. Like other digital platforms, DAMPs do not so much leverage technology to enhance their competitiveness within markets, as to radically restructure the market itself. Also, like other platforms, their rise has produced a winner-take-all paradox of centralization through democratization that defies predictions of technology-enabled industry decentralization. However, the logic and implications of the rise of DAMPs diverges, in other respects, from nonfinancial digital platforms, as finance has long possessed an informational intensity and regulatory and organizational fluidity characteristic of the digital platform economy. Consequently, the digital platform model has mostly developed endogenously in asset management through incremental innovation by major financial firms—in a process that has reinforced the position of leading incumbent asset management centers, and above all New York—rather than being introduced from the outside by upstart technology firms and clusters.Less
While contemporary technological disruption is increasingly conceptualized in terms of the logic and paradoxes of the digital platform economy, discussions of FinTech have only engaged to a limited extent with these debates—particularly from an economic geographic standpoint. This chapter fills this gap by extending the Global Financial Network (GFN) framework to problematize the organizational and geographic logic of the digital platform economy in finance, and applying it to examine the impact of the digital platform model on asset management. It shows that asset management is being profoundly disrupted by what we dub digital asset management platforms—or DAMPs—which encompass services including index fund and ETF provision, robo-advising, and analytics and trading support. Like other digital platforms, DAMPs do not so much leverage technology to enhance their competitiveness within markets, as to radically restructure the market itself. Also, like other platforms, their rise has produced a winner-take-all paradox of centralization through democratization that defies predictions of technology-enabled industry decentralization. However, the logic and implications of the rise of DAMPs diverges, in other respects, from nonfinancial digital platforms, as finance has long possessed an informational intensity and regulatory and organizational fluidity characteristic of the digital platform economy. Consequently, the digital platform model has mostly developed endogenously in asset management through incremental innovation by major financial firms—in a process that has reinforced the position of leading incumbent asset management centers, and above all New York—rather than being introduced from the outside by upstart technology firms and clusters.
Howard Marks
- Published in print:
- 2011
- Published Online:
- November 2015
- ISBN:
- 9780231153683
- eISBN:
- 9780231527095
- Item type:
- chapter
- Publisher:
- Columbia University Press
- DOI:
- 10.7312/columbia/9780231153683.003.0002
- Subject:
- Economics and Finance, Financial Economics
This chapter looks at a vital prerequisite for successful investing: understanding market efficiency and its limitations. The 1960s saw the emergence of a new theory of finance and investing, a body ...
More
This chapter looks at a vital prerequisite for successful investing: understanding market efficiency and its limitations. The 1960s saw the emergence of a new theory of finance and investing, a body of thought known as the “Chicago School.” The theory included concepts that went on to become important elements in investment dialogue: risk aversion, volatility as the definition of risk, risk-adjusted returns, systematic and nonsystematic risk, alpha, beta, the random walk hypothesis and the efficient market hypothesis. The most important upshot from the efficient market hypothesis is its conclusion that “you can't beat the market,” which was buttressed by studies of the performance of mutual funds. This chapter provides an overview of the assumptions that underlie the theory of efficient markets and goes on to discuss index funds. It also reflects on the debate over efficiency versus inefficiency and explains why understanding market efficiency is the most important thing in successful investing.Less
This chapter looks at a vital prerequisite for successful investing: understanding market efficiency and its limitations. The 1960s saw the emergence of a new theory of finance and investing, a body of thought known as the “Chicago School.” The theory included concepts that went on to become important elements in investment dialogue: risk aversion, volatility as the definition of risk, risk-adjusted returns, systematic and nonsystematic risk, alpha, beta, the random walk hypothesis and the efficient market hypothesis. The most important upshot from the efficient market hypothesis is its conclusion that “you can't beat the market,” which was buttressed by studies of the performance of mutual funds. This chapter provides an overview of the assumptions that underlie the theory of efficient markets and goes on to discuss index funds. It also reflects on the debate over efficiency versus inefficiency and explains why understanding market efficiency is the most important thing in successful investing.
Roger W. Spencer and David A. Macpherson
- Published in print:
- 2014
- Published Online:
- May 2015
- ISBN:
- 9780262027960
- eISBN:
- 9780262325868
- Item type:
- chapter
- Publisher:
- The MIT Press
- DOI:
- 10.7551/mitpress/9780262027960.003.0012
- Subject:
- Economics and Finance, Economic History
This chapter looks at the career of Myron S. Scholes who received the Nobel Prize in 1997. Born in 1941, Scholes went to McMaster University for his B.A. and completed his Ph.D. at the University of ...
More
This chapter looks at the career of Myron S. Scholes who received the Nobel Prize in 1997. Born in 1941, Scholes went to McMaster University for his B.A. and completed his Ph.D. at the University of Chicago in 1969. He became a professor at the Graduate School of Business, University of Chicago, and a professor of finance, emeritus, at Stanford University. Together with Mark Wolfson, he developed a new theory of tax planning under uncertainty and information asymmetry. His work as an economist was shaped by attempts to conceptualize and test real-world problems. He helped invent the concept of the index fund. His other works involved developing models to explain changes in the prices of risk transfer and liquidity in the market. He wrote Taxes and Business Strategy: A Planning Approach in collaboration with Wolfson.Less
This chapter looks at the career of Myron S. Scholes who received the Nobel Prize in 1997. Born in 1941, Scholes went to McMaster University for his B.A. and completed his Ph.D. at the University of Chicago in 1969. He became a professor at the Graduate School of Business, University of Chicago, and a professor of finance, emeritus, at Stanford University. Together with Mark Wolfson, he developed a new theory of tax planning under uncertainty and information asymmetry. His work as an economist was shaped by attempts to conceptualize and test real-world problems. He helped invent the concept of the index fund. His other works involved developing models to explain changes in the prices of risk transfer and liquidity in the market. He wrote Taxes and Business Strategy: A Planning Approach in collaboration with Wolfson.
