The full transcript of John Bogle’s recent webinar examining exchange-traded funds and the outlook for America’s investors.

 

As part of the festivities surrounding the 2009 Journal of Indexes editorial board meeting, IndexUniverse.com hosted a live webinar with Vanguard founder and index industry legend John Bogle.

During the one-hour presentation, Mr. Bogle unveiled new research regarding how successful (or not) investors are when trading exchange-traded funds, and took a big picture look at the state of American finance.

Moderated by JoI editor and IndexUniverse.com publisher Jim Wiandt, the webinar features an extensive audience Q&A session. A full transcript follows below.

Jim Wiandt, editor, Journal of Indexes (Wiandt): Good morning everyone, and welcome to a very special event that we have here today. We are actually at the NASDAQ market site and we have the Journal of Indexes editorial board meeting today.

We have

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Investors pulled nearly $6 billion out of exchange-traded funds in February, the first time ETF fund flows have been negative in nearly a year.

Investors pulled nearly $6 billion out of exchange-traded funds in February, the first time ETF fund flows have been negative in nearly a year. The news reversed the strong trend seen in January 2009 and December 2008, when investors poured more than $80 billion into ETFs.

Month

ETF Fund Flows

Feb-09

(5,794)

Jan-09

41,989

Dec-08

42,841

Nov-08

26,375

Oct-08

7,303

Sep-08

57,662

Aug-08

11,336

Jul-08

13,986

Jun-08

9,350

May-08

2,947

...

Investors pulled nearly $6 billion out of exchange-traded funds in February, the first time ETF fund flows have been negative in nearly a year.

 

Investors pulled nearly $6 billion out of exchange-traded funds in February, the first time ETF fund flows have been negative in nearly a year.

The new data, compiled by the National Stock Exchange and published on Wednesday, reversed the strong trend seen in January 2009 and December 2008. That's when investors poured more than $80 billion into ETFs.

 

Month

ETF Fund Flows

Feb-09

(5,794)

Jan-09

41,989

Dec-08

42,841

Nov-08

26,375

Oct-08

7,303

Sep-08

57,662

Aug-08

11,336

Jul-08

...

In a market sitting at 1997 levels, I'm asking myself inturn, "Which ETFs should I buy?" and "How are real estate prices looking in South Dakota?" (for my bunker/potato farm).

Are you scared yet?  I suppose at this point it's probably more like beaten and whimpering. This is an ugly, UGLY market, and it feels like capitulation now, with maybe one last freefall in front of us. So hold onto your stomach and keep your wits, because if you happen to have anything to put into the market, anywhere around these depths is going to be looking great somewhere down the line (though maybe way WAY down the line).

Matt said in late-2008 that we'd see 15,000 before we saw 6,000 for the Dow, and I said don't be so sure.

...

 

Barclays Global Investors expects its exchange-traded funds business in Brazil to reach $1 billion to $2 billion in the next year.

The forecast follows the introduction of the first three BGI iShares ETFs for the Brazilian market last week (see story here.)

The iShares ETFs were the first ETFs approved by the Brazilian regulator, the Comissão de Valores Mobiliários, a process that BGI began planning three years ago. More ETF companies may now follow iShares' lead into Brazil, where hedge funds and institutional use of ETFs is expected to lead the adoption of ETFs by local investors.  

In most Latin American ETF markets, it has been institutions leading the way, and retail investor use of ETFs expected to be a much longer-term story.

Mexico and Chile are among the easiest markets in Latin America to introduce ETFs, and these are the markets where BGI's early Latin

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