John Bogle's philosophy, applied to ETFs

Is there a cheaper fund on the same index? Where no other covered fund tracks the fund's index (an active fund, a one-of-a-kind index), the comparison is the cheapest fund in the same segment, and the page says which of the two it used. Only funds of the same construction are compared: a currency-hedged fund against currency-hedged funds. Measure: the fee above the cheapest peer. The fund's fee minus the lowest fee among covered funds in its peer set, percentage points; 0 for the cheapest. The peer set is every covered fund tracking the same index where at least two do ('same index'), else every covered fund in the same category and segment ('same segment'). Null where the fee is null or the peer set is the fund alone. A peer whose fee reads 0.00 is left out of the peer set. LIKE FOR LIKE (2026-10-22; the peer-set rule is ETFIQ's): only peers of the fund's own construction count (the construction compared), so a currency-hedged fund is compared with currency-hedged funds on its index or in its segment, never with the plain fund. Null, with the reason printed, where the fund's construction is not read or no other fund of its construction has a published fee: a comparison that is not like for like is never made. Supports where the fee above the cheapest peer at or below 0.05 points. Challenges where the fee above the cheapest peer at or above 0.25 points. Mixed between. Threshold: ETFIQ’s figure, because the investor published none. Bogle says to own the lowest-cost fund but gives no margin; within 0.05 points of the cheapest and 0.25 points above it are ETFIQ's. Where the peers track the same index, the seat Supports only where the fund is within 0.05 points of the cheapest: on one index, the cheapest fund is the one Bogle would own, and that is the case Elton, Gruber and Busse (2004) test. Peers are like for like, ETFIQ's rule (2026-10-22): a currency-hedged fund is compared only with currency-hedged funds, read from its index and its N-PORT, never its name, and where it has no such peer the gap is not measured rather than read against a plain fund. Where the peers are only the same segment, a fee 0.10 points or more above the segment's cheapest also keeps the seat from Supporting, ETFIQ's line: a broad fund on another index of the same companies does not escape a fee six times its neighbour's (the Russell Midcap at 0.18% beside the CRSP mid caps at 0.03%). Printed with: the fee peer set: Which peer set the fee gap used: 'same index' where at least two covered funds track the fund's index, else 'same segment'. Printed beside the fee gap on every reading, so a gap is never called a same-index gap where it is not.; the construction compared: The fund's construction for a like-for-like fee comparison, ETFIQ's rule: 'currency hedged' where the index it names states a currency hedge (hedged to the US dollar, dollar-hedged, currency-hedged, currency neutral), or where its latest N-PORT carries currency forwards and its index is a hedged one; 'plain' where neither its index nor its N-PORT shows a currency hedge; null where its N-PORT carries currency forwards its index does not name. Never read from the fund's name. Only features that change the cost of the same exposure are constructions, currency hedging first; tilts and screens are not, since the seat already holds them at Mixed. Weight: 20%; where the fee peer set equal to same index or (the fee peer set equal to same segment and the fee above the cheapest peer at or above 0.1 points), the seat Supports only where this reads Supports. Sourced to: John C. Bogle, The Little Book of Common Sense Investing (Wiley, 10th anniversary edition, updated and revised, 2017), chapter 5, p. 57; John C. Bogle, The Relentless Rules of Humble Arithmetic (Financial Analysts Journal 61(6), 22-35, DOI 10.2469/faj.v61.n6.2769, 2005). Research, supports the measure where the fee peer set equal to same index: Edwin J. Elton, Martin J. Gruber and Jeffrey A. Busse (2004), Are Investors Rational? Choices among Index Funds, The Journal of Finance 59(1), 261-288. Where the peer set is the same index, the test this criterion runs: S&P 500 index funds own the same stocks, and choosing the lowest-cost one beat the funds investors chose. Research, context, not a test of the measure where the fee peer set equal to same segment: Edwin J. Elton, Martin J. Gruber and Jeffrey A. Busse (2004), Are Investors Rational? Choices among Index Funds, The Journal of Finance 59(1), 261-288. Where the peer set is a segment, the funds do not own the same index, so the paper is context. Research, supports the measure where the fee peer set equal to same index: William F. Sharpe (1991), The Arithmetic of Active Management, Financial Analysts Journal 47(1), 7-9. Funds holding the same index earn the same return before costs, so the fee gap between them is what one holder loses against the other. Research, context, not a test of the measure: Mark M. Carhart (1997), On Persistence in Mutual Fund Performance, The Journal of Finance 52(1), 57-82. Expenses predict returns after costs across mutual funds; the paper does not compare funds on one index, which is what this measure does where the peer set is the same index.

Is the yearly fee low, by Bogle's own low-cost figure? Measure: the fee. Net expense ratio after any waiver, as the prospectus states it, percent of net assets a year. A fee of 0.00 is not read, as no ETF charges nothing without a waiver and the published figure carries neither a second source nor a waiver's end date. Supports where the fee at or below 0.2%. Challenges where the fee at or above 0.9%. Mixed between. Threshold: ETFIQ’s figure, because the investor published none. Both lines are ETFIQ's reading of Bogle's figures, not lines he drew. 0.2% is the low-cost fund in his chapter 3 illustration (Common Sense on Mutual Funds, p. 104), an example fund's fee; 0.9% is the all-in cost (expense ratio plus trading costs) of the cheapest quarter of active equity funds in his Exhibit 5.1, so a fund whose fee alone is 0.9% costs at least that much before it trades. Weight: 20%; required. Sourced to: John C. Bogle, Common Sense on Mutual Funds (Wiley, fully updated 10th anniversary edition, 2009), chapter 3, p. 104; John C. Bogle, The Little Book of Common Sense Investing (Wiley, 10th anniversary edition, updated and revised, 2017), chapter 5, p. 57. Research, supports the measure: William F. Sharpe (1991), The Arithmetic of Active Management, Financial Analysts Journal 47(1), 7-9. After costs the average active dollar trails the passive dollar by its extra cost, so a lower fee is a higher expected return against the same market. Research, supports the measure: Mark M. Carhart (1997), On Persistence in Mutual Fund Performance, The Journal of Finance 52(1), 57-82. Expenses persistently predict mutual fund returns after costs. Research, context, not a test of the measure: Kenneth R. French (2008), Presidential Address: The Cost of Active Investing, The Journal of Finance 63(4), 1537-1573. The cost of active investing came to 0.67% of the market's value a year from 1980 to 2006: the scale of gap this measure reads, though the paper does not test fee levels against returns.

Does the fund own a broad market, or a few dozen positions? Measure: the breadth of the book. broad where the look-through book holds 300 or more positions, narrow under 50, between otherwise; a bond fund's positions are its issues, not its issuers. Null where the fund has no book. Supports where the breadth of the book equal to broad. Challenges where the breadth of the book equal to narrow. Mixed between. Threshold: ETFIQ’s figure, because the investor published none. 300 positions for broad and under 50 for narrow are ETFIQ's lines; Bogle writes of broad diversification against narrow concentration (Common Sense on Mutual Funds, "On Indexing", p. 187) and gives no count. A bond fund's positions are its issues, not its issuers. The Dow's 30 companies (DIA) read narrow. The seat Supports only where the fund is broad: a fund of 50 or 200 of the largest companies is not the whole market Bogle wrote for, though it fails none of his lines. Weight: 20%; required; the seat Supports only where this reads Supports. Sourced to: John C. Bogle, Common Sense on Mutual Funds (Wiley, fully updated 10th anniversary edition, 2009), "On Indexing", p. 187; John C. Bogle, The Little Book of Common Sense Investing (Wiley, 10th anniversary edition, updated and revised, 2017), chapter 15, p. 180. Research, context, not a test of the measure: Kenneth R. French (2008), Presidential Address: The Cost of Active Investing, The Journal of Finance 63(4), 1537-1573. Holding the passive market portfolio instead of paying for active management would have raised the typical investor's return; the paper measures the cost of active investing, not a count of positions. Research, context, not a test of the measure: William F. Sharpe (1991), The Arithmetic of Active Management, Financial Analysts Journal 47(1), 7-9. The arithmetic holds for the whole market held in proportion; it says nothing directly about a fund of 300 positions against one of 50.

Is the fund a narrow sector, country or specialised product, the kind Bogle wrote against? Measure: specialised. yes for a fund on a specialised desk (themes, leverage, crypto, buffer, income, alternatives, prediction markets, sports teams); for a stock fund, read from its holdings: each holding placed in the sector whose sector funds hold it most often (the fund's own vote left out), yes where one sector is 80% of the placed weight or two are 90%, no otherwise, read only where 80% of the fund's weight is placed; where less is placed, and for a single country or region, a single commodity or a currency, the fund's segment decides. ETFIQ's mapping of Bogle's single-industry definition. Supports where specialised equal to no. Challenges where specialised equal to yes. Mixed between. Threshold: ETFIQ’s figure, because the investor published none. The warning is Bogle's own: specialised sector funds offer "far less diversification and commensurately more risk" (The Little Book of Common Sense Investing, chapter 15, p. 180), Exhibit 15.1 sets broad index funds against specialized ones (p. 181), investors in narrow ETFs will likely fall well behind (p. 187), and betting on one sector and then another is a loser's game (chapter 13, p. 164). His own definition of the funds he means: "Concentrated specialty funds (183) invest in the stocks of a single industry, such as health care, public utilities, or gold mines" (Bogle on Mutual Funds, 1994, p. 68, by the book's index). Health care and utilities are sectors, so the eleven standard sectors count; real estate, a sector of its own, counts by the same measure, and that is ETFIQ's mapping, not his list: his only words on real estate say his simple examples ignored it and gold, which "might usefully be considered as ancillary asset classes" (John Bogle on Investing, 2001, p. 72), so he did not rule them out. Single countries and regions, single commodities and currencies, and every fund on ETFIQ's specialised desks count too, ETFIQ's mapping as well. Read from what the fund holds: each holding is placed in the sector whose sector funds own it, and a fund with one sector at 80% of its placed weight, or two at 90%, is specialised (ETFIQ's lines); only where under 80% of its weight can be placed does its segment decide. It decides the seat alone. Weight: 20%; required; a Challenge here makes the seat Challenge. Sourced to: John C. Bogle, The Little Book of Common Sense Investing (Wiley, 10th anniversary edition, updated and revised, 2017), chapter 15, pp. 180, 181 (Exhibit 15.1), 184, 187 and 191; John C. Bogle, The Little Book of Common Sense Investing (Wiley, 10th anniversary edition, updated and revised, 2017), chapter 13, p. 164; John C. Bogle, Bogle on Mutual Funds: New Perspectives for the Intelligent Investor (Irwin Professional Publishing, first edition, 1994), p. 68; John C. Bogle, John Bogle on Investing: The First 50 Years (McGraw-Hill, first edition, 2001), p. 72. Research, supports the measure: Itzhak Ben-David, Francesco Franzoni, Byungwook Kim and Rabih Moussawi (2023), Competition for Attention in the ETF Space, The Review of Financial Studies 36(3), 987-1042. Specialised ETFs, which track niche portfolios and charge higher fees, lost about 30% risk-adjusted over their first five years.

Does the fund own its market at market weights, or tilt it towards a factor, a style or another weighting? Measure: the weighting. For a stock fund that is not specialised, on positive evidence only, and anything that cannot be read cleanly is null. tilt where a word in the fund's own name or the name of the index it names says a factor, a style, ESG, a screen, an exclusion or a trading rule (factor, multi-factor, quality, value, growth, momentum, dividend, equal weight, capped, responsible, screened, select, leaders, climate, trend, tactical, adaptive, rotation, risk management, moving average, ex before a name such as ex S&P 100 or ex Top 20, and the like; ex United States and ex US name the region an international fund covers and are not an exclusion: ETFIQ's list, one way only); or its prospectus says its index weights or selects by a factor, dividends, ESG or a style; or its holdings lean to value or growth (under 35% or over 65% of its matched holdings in growth indexes); or, from its own N-PORT against a cap-weighted version of itself (each stock's value and shares held, and the company's shares outstanding near that date), more than 2.5% of its weight sits above 1.15 times its stocks' market values where its typical holding sits within 1.10 times its market value, or more than 10% wherever it sits; or, for a fund whose holdings reach the market's 20 largest companies, it holds under 95% of the market value of the companies in its range or a sector of that range at under half that rate; or, for a fund of funds, a fund of 2.5% or more of it reads tilt; or a foreign book's weights are out of proportion to its house's broad fund (R squared of the log weights under 0.75). market where its own holdings, priced at market value, follow their market values and none of the above holds, the fund's words agreeing; a fund of funds where its funds are 95% or more of it and each of 2.5% or more reads market; a foreign or global book, whose companies file no 10-K and so cannot all be priced, on its own prospectus alone, where it says its index weights by market capitalization and its name and index say no tilt. Null otherwise: a US book with under 70% of its common stock priced, an excess float may explain, a fund whose funds cannot be read. A size slice is read on its weights and not tested for a screen. Every line is ETFIQ's. Supports where the weighting equal to market. Challenges where the weighting equal to tilt. Mixed between. Threshold: ETFIQ’s figure, because the investor published none. The line is Bogle's: smart beta managers create their own indexes, which he calls not indexes in the traditional sense but "active strategies claiming to be indexes", weighted by dividends or a single factor rather than by market capitalization (The Little Book of Common Sense Investing, 2017, chapter 16, p. 199); the fundamental and dividend-weighted funds he tested had proven "essentially nothing" (p. 203), and market-weighted index funds "guarantee that you will receive your fair share" of the market's return (p. 205). How it is read is ETFIQ's, and only on positive evidence. For a US fund, market weights need two sources to agree. The fund's holdings: its own N-PORT gives each stock's value and the shares held, and each company's filings give its shares outstanding, so the fund is compared with a cap-weighted version of itself on one day. And its own words: a word in its name or its index's that says a factor, a style, ESG, a screen, an exclusion ("ex" before a name, such as ex S&P 100 or ex Top 20, where ex US and ex United States only name the region an international fund covers) or a trading rule (trend, tactical, adaptive, rotation, risk management, moving average), or a prospectus that says one, makes it a tilt whatever the holdings show. More than 2.5% of a fund's weight above 1.15 times its stocks' market values is another weighting; float, which holds a closely held company below its market value, lifts every other holding a little above its own, so where a fund's typical holding already sits above 1.10 times its market value an excess under 10% is not measured. A fund whose holdings reach the market's 20 largest companies but own under 95% of the market value in its range, or leave out a sector of it, screens. Bogle's books say nothing of screened or socially responsible funds beyond Vanguard's launching one (a full-text search of ten of them, 2026-10-22), so reading a screen as a tilt is ETFIQ's: a fund that leaves out part of its market does not own it. A fund of funds is read through its funds' own readings. A foreign or global fund, whose companies file no 10-K and so cannot all be priced, reads market on one source, its own prospectus, only where it says market capitalization and its name and index say no tilt. In a comparison, where one fund's weights cannot be read, the line is read on none of them. Every line is ETFIQ's. A tilt keeps the seat from Supporting and never decides it on its own, and so does a line that could not be read. ETFIQ reads a cap-weighted mid- or small-cap fund as market weights, although Bogle names size among the factors. Weight: 20%; a Challenge here keeps the seat from Supporting; unread, it keeps the seat from Supporting too; in a comparison, where one fund cannot be read on it, it is read on none of them. Applies to: the category equal to stocks. Sourced to: John C. Bogle, The Little Book of Common Sense Investing (Wiley, 10th anniversary edition, updated and revised, 2017), chapter 16, "Index Funds That Promise to Beat the Market", pp. 199, 203 and 205. Research: none cited; the criterion rests on the source alone.