Passive aggressives

Add two more voices to the chorus singing the praises of index investing.

Add two more voices to the chorus singing the praises of index investing. They belong to Gary Gensler, who spent 18 years in media banking and fixed-income trading at Goldman Sachs before serving as undersecretary of the Treasury in the Clinton administration, and his government colleague Gregory Baer, former assistant Treasury secretary. The pair have teamed up to pen an exposé of the mutual fund and brokerage industries. Titled The Great Mutual Fund Trap, the tome, which will be published by Broadway Books next month, argues that investors piddle away fortunes on money managers who don’t beat the market. Instead, say the high-powered authors, consumers should be stocking up on low-cost index funds. “Americans spend billions every year on money managers,” says Gensler. “Most of that is unnecessary. The dream of big returns exists. But the reality does not.” Gensler, who has no plans to return to the financial world, says he and Baer wrote the book because the subject of retail investing was crying out for attention. “We don’t plan to be financial planners,” says Gensler. “But we both felt strongly about investor issues.”

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