John Bogle on Investing: The First 50 Years

CONCLUSION

As … the principles of diversification on which these (investment) companies operate is a sound one, the only probable causes for loss of public confidence would be gross mismanagement or, more likely …, misunderstanding on the part of the public as to the nature of equity investment as such, and consequent expectation of miracles from investment company management.¹

THE TREMENDOUS growth potentiality of the investment company, in conclusion, rests on its ability to serve the needs of both individual and institutional investors. It can do this best by stating its objectives explicitly, so that a minimum of investor misconception as to the fundamentals of equity will exist. The investment company industry must prepare for its next hurdle, which is likely to come from a serious decline in the securities market, by making it clear that its shares are not panaceas for all the ills of investment. That the market will fluctuate is certain, and merely because it has experienced a general upward trend in the decade of the investment company's greatest growth may have made many investors fail to realize that the share value, like the market, is liable to decline.

To further serve the interests of investors, and thereby increase its own size, the investment company may institute new types of shares in the future. There is need for a venture capital fund, as well as funds composed of tax-exempt securities, funds with the securities of industries in given geographic areas, and ...