1 00:00:05,920 --> 00:00:12,880 Speaker 1: Well trillions. I'm Joel Webber and I'm Americultures Eric. We've 2 00:00:12,920 --> 00:00:16,760 Speaker 1: had some heavy hitters on the podcast lately and this 3 00:00:16,800 --> 00:00:20,960 Speaker 1: week is no exception. Yeah, you could introduce this person 4 00:00:21,239 --> 00:00:24,600 Speaker 1: as the portfolio manager of the largest fund in the 5 00:00:24,640 --> 00:00:28,600 Speaker 1: world and the first trillion dollar fund in the world. 6 00:00:28,680 --> 00:00:31,880 Speaker 1: This is the first trillion dollar portfolio manager. Almost definitely, 7 00:00:32,200 --> 00:00:35,760 Speaker 1: We're not quite there, but it's it's it's almost an inevitability. 8 00:00:35,800 --> 00:00:39,479 Speaker 1: Almost definitely. Is a is a great hedge. He's somewhere 9 00:00:39,479 --> 00:00:42,199 Speaker 1: in the nine d billion range right now. And we're 10 00:00:42,240 --> 00:00:45,640 Speaker 1: talking about Jerry O. Reiley at Vanguard and what do 11 00:00:45,640 --> 00:00:49,400 Speaker 1: you do at Vanguard? Eric is the guy who makes 12 00:00:49,400 --> 00:00:55,200 Speaker 1: sure that you're Vanguard stock index fund tracks the index 13 00:00:55,840 --> 00:00:59,160 Speaker 1: right the index lives into vacuum, and he has to 14 00:00:59,200 --> 00:01:02,280 Speaker 1: get as close as ken to it and deal with 15 00:01:02,320 --> 00:01:04,920 Speaker 1: the realities of tracking stocks that come in and out 16 00:01:05,400 --> 00:01:08,800 Speaker 1: corporate actions. It's a lot more complicated than it looks. 17 00:01:08,840 --> 00:01:11,679 Speaker 1: But his one fund is the Total Market Fund, which 18 00:01:11,680 --> 00:01:14,039 Speaker 1: is the largest fund in the world. As you said, 19 00:01:14,040 --> 00:01:16,960 Speaker 1: I think it's nine close to nifty billion right now, 20 00:01:17,520 --> 00:01:20,440 Speaker 1: and that's sort of the biggest fund he runs, but 21 00:01:20,480 --> 00:01:23,600 Speaker 1: he runs many, many and some are mutual funds like 22 00:01:23,640 --> 00:01:27,280 Speaker 1: that one, and others are actually e t s. Yeah, 23 00:01:27,319 --> 00:01:29,039 Speaker 1: in Vanguard's case, e t F is like a share 24 00:01:29,080 --> 00:01:33,039 Speaker 1: class of the index fund. So that includes v T I, 25 00:01:33,160 --> 00:01:35,640 Speaker 1: which a lot of people probably know our own as 26 00:01:35,720 --> 00:01:38,280 Speaker 1: part of the whole package, and that is unique. So 27 00:01:38,520 --> 00:01:41,679 Speaker 1: in a way, the Vanguard fund assets per fund are 28 00:01:41,680 --> 00:01:43,920 Speaker 1: a little higher than others because their e t F 29 00:01:44,000 --> 00:01:47,840 Speaker 1: is counted in that number. And uh, yeah, it's possible 30 00:01:47,840 --> 00:01:50,040 Speaker 1: if we keep having this nice market that it can 31 00:01:50,120 --> 00:01:52,560 Speaker 1: hit a trillion in a couple of months. Another thing 32 00:01:52,560 --> 00:01:55,800 Speaker 1: about Jerry is that this is not a guy that 33 00:01:55,880 --> 00:01:59,360 Speaker 1: we hear from often. No. I mean, the media is 34 00:01:59,360 --> 00:02:01,880 Speaker 1: in int stayed in like Alpha. You know who's hitting 35 00:02:01,880 --> 00:02:04,800 Speaker 1: the home run this year, the Jim Simons of the world, 36 00:02:04,800 --> 00:02:07,760 Speaker 1: the hedge fund managers. He's trying to tie for him, 37 00:02:08,120 --> 00:02:11,040 Speaker 1: tying his winning. But what I find fascinating about him 38 00:02:11,080 --> 00:02:13,480 Speaker 1: and others who do what he does is I think 39 00:02:13,480 --> 00:02:17,120 Speaker 1: they're underappreciated as a whole, and they're they're rebating money 40 00:02:17,200 --> 00:02:19,680 Speaker 1: left and right. So if you take the total market 41 00:02:19,680 --> 00:02:24,079 Speaker 1: fund that he manages, fifty billion in assets, it charges 42 00:02:24,160 --> 00:02:27,680 Speaker 1: a roughly four basis points depending on the share class, 43 00:02:28,320 --> 00:02:30,840 Speaker 1: and yet it only misses the index by one point 44 00:02:30,880 --> 00:02:33,639 Speaker 1: five basis points, and an e t F for index 45 00:02:33,680 --> 00:02:36,520 Speaker 1: funds should trail the index by the same amount of 46 00:02:36,560 --> 00:02:40,200 Speaker 1: as the expense ratio. So if you can get closer 47 00:02:40,600 --> 00:02:42,919 Speaker 1: to the index and the expense ratio, that's free money 48 00:02:42,960 --> 00:02:45,600 Speaker 1: back to the investor. And so in Jerry's case, he's 49 00:02:45,639 --> 00:02:48,760 Speaker 1: basically returning about two d and thirty million back to 50 00:02:48,919 --> 00:02:52,960 Speaker 1: investors through what we'll go into, which is securities, lending, 51 00:02:53,360 --> 00:02:56,640 Speaker 1: trading acumen, and there's a lot of other tricks and 52 00:02:56,639 --> 00:02:59,400 Speaker 1: opportunities that he can do to return that money. Also 53 00:02:59,440 --> 00:03:02,240 Speaker 1: joining us on this episode is Annie Massa, a reporter 54 00:03:02,320 --> 00:03:08,079 Speaker 1: with brit News, this time on trillions the unsung art 55 00:03:08,120 --> 00:03:14,160 Speaker 1: of passive with Vanguard Almost trillion dollar man. Jerry, welcome 56 00:03:14,200 --> 00:03:18,679 Speaker 1: to Trilliance. Thank you. I want to ask about what 57 00:03:18,800 --> 00:03:22,240 Speaker 1: you do every day. You know, I think of passive 58 00:03:22,280 --> 00:03:26,720 Speaker 1: investment and it seems like it might be relatively hands off. 59 00:03:27,639 --> 00:03:30,760 Speaker 1: So what are you doing all day? I mean there's 60 00:03:30,760 --> 00:03:32,320 Speaker 1: a lot that goes into I mean, our job, if 61 00:03:32,360 --> 00:03:34,160 Speaker 1: you boil it down, it really is to deliver the 62 00:03:34,200 --> 00:03:37,880 Speaker 1: performance of the benchmark to our shareholders. And now how 63 00:03:37,960 --> 00:03:41,440 Speaker 1: you do that? Is a little more complicated, so we'll 64 00:03:41,480 --> 00:03:43,880 Speaker 1: come in in the morning. Before we even get in, 65 00:03:43,960 --> 00:03:47,040 Speaker 1: our data team has come in and they've already received 66 00:03:47,080 --> 00:03:50,080 Speaker 1: all the indexes from the different index providers, and they've 67 00:03:50,080 --> 00:03:53,960 Speaker 1: made sure that it's all the the corporate actions, the splits, 68 00:03:54,080 --> 00:03:56,240 Speaker 1: the reverse splits, whatever else needs to take place is 69 00:03:56,280 --> 00:03:57,840 Speaker 1: going to take place, so that we know that the 70 00:03:57,880 --> 00:04:00,560 Speaker 1: index that we're tracking to two is the exact same 71 00:04:00,560 --> 00:04:03,480 Speaker 1: index as S and P, as CRISP, as Russell, as 72 00:04:03,480 --> 00:04:05,520 Speaker 1: fox See, and all these different index survivors are giving 73 00:04:05,520 --> 00:04:07,320 Speaker 1: to us. So once you have that, that's kind of 74 00:04:07,320 --> 00:04:10,440 Speaker 1: the foundational piece, and then it's okay, my fund and 75 00:04:10,480 --> 00:04:14,160 Speaker 1: the index making sure that everything that takes place throughout 76 00:04:14,160 --> 00:04:16,640 Speaker 1: the day, So those things would be like all of 77 00:04:16,640 --> 00:04:19,000 Speaker 1: the cash flows coming in, making sure that you have 78 00:04:19,040 --> 00:04:21,520 Speaker 1: a really good understanding of what those cash flows are. 79 00:04:22,200 --> 00:04:24,560 Speaker 1: Any index changes that are happening over the course of 80 00:04:24,600 --> 00:04:28,200 Speaker 1: the day, any syndicate offerings that may have priced to 81 00:04:28,320 --> 00:04:30,520 Speaker 1: night before, and if the index is making the change 82 00:04:30,560 --> 00:04:33,520 Speaker 1: that day, there's both the upweight and also we need 83 00:04:33,560 --> 00:04:37,040 Speaker 1: to be able to fund the the buys that are 84 00:04:37,080 --> 00:04:40,640 Speaker 1: taking place, any type of corporate actions that are taking place, 85 00:04:40,800 --> 00:04:43,480 Speaker 1: throughout the day. And then keep in mind that you know, 86 00:04:43,520 --> 00:04:46,599 Speaker 1: we receive cash flows all the way up until four o'clock, 87 00:04:47,000 --> 00:04:49,720 Speaker 1: so I could in total stock, for example, I may 88 00:04:49,760 --> 00:04:52,000 Speaker 1: think that I have a you know, at three thirty, 89 00:04:52,080 --> 00:04:54,360 Speaker 1: I could think I have a million dollar list that 90 00:04:54,400 --> 00:04:57,920 Speaker 1: I'm buying today, and at three forty five find out that, hey, 91 00:04:58,080 --> 00:05:00,360 Speaker 1: two million is being redeemed from the and so all 92 00:05:00,400 --> 00:05:02,000 Speaker 1: of a sudden, it's like, okay, I need to stop 93 00:05:02,040 --> 00:05:04,720 Speaker 1: and need to change directions, need to to reduce my list. 94 00:05:05,279 --> 00:05:07,080 Speaker 1: Um So, there are all sorts of things that are 95 00:05:07,080 --> 00:05:08,960 Speaker 1: going to happen throughout the day that are going to 96 00:05:09,160 --> 00:05:11,240 Speaker 1: force you to kind of change the way you trade. 97 00:05:11,640 --> 00:05:15,160 Speaker 1: And then of course there's the actual trading itself. Um So, 98 00:05:15,320 --> 00:05:18,599 Speaker 1: we are at desk of about twenty four traders and 99 00:05:19,000 --> 00:05:23,680 Speaker 1: roughly split fifty fifty between international and US, and our 100 00:05:23,760 --> 00:05:26,320 Speaker 1: job basically is to navigate, you know, the market in 101 00:05:26,400 --> 00:05:28,679 Speaker 1: terms of you know, it's it's a fairly fragmented market, 102 00:05:28,680 --> 00:05:31,520 Speaker 1: as you know, so you have thirteen different exchanges and 103 00:05:31,560 --> 00:05:34,359 Speaker 1: fifty different pools of liquidity. So when you have a 104 00:05:34,360 --> 00:05:36,960 Speaker 1: trade list, what are the objectives? What is the urgency 105 00:05:37,000 --> 00:05:40,680 Speaker 1: to get this list done? And what is the appropriate strategy. 106 00:05:40,720 --> 00:05:43,080 Speaker 1: So understanding all of that kind of goes into your 107 00:05:43,120 --> 00:05:46,360 Speaker 1: every day in terms of tracking that benchmark, and you know, 108 00:05:46,400 --> 00:05:49,080 Speaker 1: we we want to be as tight as possible. We're 109 00:05:49,080 --> 00:05:51,720 Speaker 1: talking fractions of a basis point, and we will receive 110 00:05:51,760 --> 00:05:54,040 Speaker 1: a scorecard every morning letting us know how we did 111 00:05:54,040 --> 00:05:56,760 Speaker 1: the previous day. So at no point do we think, 112 00:05:56,800 --> 00:05:59,200 Speaker 1: I hope we're tracking. We know exactly by ten o'clock 113 00:05:59,240 --> 00:06:01,440 Speaker 1: the next morning, how fund did versus the benchmark the 114 00:06:01,480 --> 00:06:04,680 Speaker 1: day before. So you said you had twenty four so 115 00:06:04,839 --> 00:06:09,119 Speaker 1: traders working for you. How many funds do you manage? Well, 116 00:06:09,200 --> 00:06:11,800 Speaker 1: in total, we manage a little over three trillion dollars 117 00:06:11,839 --> 00:06:15,240 Speaker 1: across about two hundred and fifty different funds. And not 118 00:06:15,480 --> 00:06:17,720 Speaker 1: every single fund is going to get cash flow every day. 119 00:06:17,760 --> 00:06:20,040 Speaker 1: There are some funds that really only received cash flows 120 00:06:20,040 --> 00:06:22,440 Speaker 1: maybe mid month and end of the month, but the 121 00:06:22,560 --> 00:06:24,719 Speaker 1: good portion of those two hundred and fifty would be 122 00:06:24,720 --> 00:06:27,160 Speaker 1: receiving cash flows on a daily basis, which what will 123 00:06:27,200 --> 00:06:30,440 Speaker 1: require us to trade. So you know, fortunately we have 124 00:06:30,520 --> 00:06:33,760 Speaker 1: great technology, so we can you know, one one one 125 00:06:33,839 --> 00:06:36,679 Speaker 1: portfolio manager can handle you know a number of different 126 00:06:36,680 --> 00:06:39,280 Speaker 1: portfolios and and we work really have a kind of 127 00:06:39,320 --> 00:06:41,080 Speaker 1: a team concept here. So even though I might be 128 00:06:41,160 --> 00:06:43,680 Speaker 1: running total stock market, I know that if I'm out 129 00:06:43,720 --> 00:06:46,160 Speaker 1: that you know, Michelle Louis or Bill Coleman can take 130 00:06:46,200 --> 00:06:48,280 Speaker 1: over the reins and and run the fund every bit 131 00:06:48,279 --> 00:06:50,359 Speaker 1: as good as I can. So everyone get kind of 132 00:06:50,360 --> 00:06:52,080 Speaker 1: gets cross trained. You have kind of a team of 133 00:06:52,080 --> 00:06:55,760 Speaker 1: people that are assigned to your fund. Uh and um, 134 00:06:55,800 --> 00:06:57,600 Speaker 1: you know in Read for example, I manage the Read 135 00:06:57,600 --> 00:06:59,400 Speaker 1: fund as well. I know that Walt Mayman will be 136 00:06:59,440 --> 00:07:01,680 Speaker 1: taken over if if if I'm on vacation or if 137 00:07:01,680 --> 00:07:05,200 Speaker 1: I'm out. So here's a question, how do you play defense? 138 00:07:05,360 --> 00:07:07,839 Speaker 1: You have hedge funds out there who know when the 139 00:07:07,880 --> 00:07:11,680 Speaker 1: indexes are rebalancing and what might be added or subtracted 140 00:07:11,720 --> 00:07:14,400 Speaker 1: from the index. How do you handle that? How do 141 00:07:14,400 --> 00:07:16,880 Speaker 1: we handle it? Yeah, so we have so when we 142 00:07:16,920 --> 00:07:20,360 Speaker 1: have rebalances, which you know most of the indexes do 143 00:07:20,720 --> 00:07:24,200 Speaker 1: rebounces on a quarterly basis. So we um, you know, 144 00:07:24,320 --> 00:07:26,680 Speaker 1: have a team, a specific team on the desk that 145 00:07:26,880 --> 00:07:31,600 Speaker 1: is our rebalanced team, and they will they have history 146 00:07:31,680 --> 00:07:34,520 Speaker 1: of our rebalance is going back years and years about 147 00:07:34,520 --> 00:07:40,280 Speaker 1: how we performed versus the benchmark. We will look at names. Um, 148 00:07:40,400 --> 00:07:42,679 Speaker 1: you know, that the index provider is going to notify 149 00:07:42,840 --> 00:07:45,840 Speaker 1: us ahead of time. UM, give us what they call 150 00:07:45,880 --> 00:07:48,240 Speaker 1: a proform at index, which is basically the index that's 151 00:07:48,280 --> 00:07:50,920 Speaker 1: going to be in effect on the date of the 152 00:07:50,960 --> 00:07:53,960 Speaker 1: index changes, and then we'll figure out what we need 153 00:07:54,000 --> 00:07:56,160 Speaker 1: to trade in order to be totally in line with 154 00:07:56,200 --> 00:07:58,840 Speaker 1: the index on that date. So, I mean we're going 155 00:07:58,880 --> 00:08:01,200 Speaker 1: to look at things like, you know, has the volume 156 00:08:01,280 --> 00:08:03,680 Speaker 1: increased in names, has the price what kind of price 157 00:08:03,720 --> 00:08:06,640 Speaker 1: action has happened since the announcement. Get a sense for 158 00:08:06,800 --> 00:08:09,480 Speaker 1: if in fact people have started the front run names 159 00:08:10,120 --> 00:08:14,119 Speaker 1: and anticipation of the index buying on the day. And um, 160 00:08:14,240 --> 00:08:15,840 Speaker 1: you know, the one great thing we have on the 161 00:08:15,880 --> 00:08:18,200 Speaker 1: desk is that we have probably average ten uere here 162 00:08:18,240 --> 00:08:20,600 Speaker 1: of about fifteen years, so we have some traders who've 163 00:08:20,600 --> 00:08:23,440 Speaker 1: been here thirty odd years, but great tenure in terms 164 00:08:23,480 --> 00:08:26,720 Speaker 1: of understanding how these reboundces work. So we will be 165 00:08:26,760 --> 00:08:29,920 Speaker 1: well aware of names where perhaps people have tried to 166 00:08:29,920 --> 00:08:33,480 Speaker 1: get into an anticipation of of of you know, selling 167 00:08:33,480 --> 00:08:35,320 Speaker 1: it to the indexes on the date, and some of 168 00:08:35,360 --> 00:08:37,120 Speaker 1: those names we may decide we're not going to buy 169 00:08:37,120 --> 00:08:39,120 Speaker 1: anything ahead of the index date and just buy it 170 00:08:39,200 --> 00:08:41,840 Speaker 1: on the day and we also work closely with our 171 00:08:41,880 --> 00:08:45,680 Speaker 1: teams in risk and in our transaction cost analysis team 172 00:08:45,679 --> 00:08:47,840 Speaker 1: to make sure we're taking the appropriate level of risk 173 00:08:48,240 --> 00:08:51,280 Speaker 1: to minimum to kind of understand where that tradeoff is 174 00:08:51,320 --> 00:08:54,800 Speaker 1: between tracking our versus having too much impact on a name. 175 00:08:54,880 --> 00:08:56,960 Speaker 1: So I think, you know, you have a team that's 176 00:08:56,960 --> 00:08:59,320 Speaker 1: been doing this for quite a while. It's not like 177 00:08:59,360 --> 00:09:00,959 Speaker 1: there's a temp it that I can tell you, hey, 178 00:09:01,000 --> 00:09:02,440 Speaker 1: this is the this is what you need to do 179 00:09:02,480 --> 00:09:04,600 Speaker 1: every time there's a rebounds coming up. But just a 180 00:09:04,600 --> 00:09:09,000 Speaker 1: lot of experience and understanding of how these things work. Sure, 181 00:09:09,160 --> 00:09:12,480 Speaker 1: and and this is a more specific example even, but 182 00:09:12,600 --> 00:09:15,520 Speaker 1: all eyes are kind of on Tesla right now and 183 00:09:15,559 --> 00:09:17,719 Speaker 1: the prospect of it being added to the s n 184 00:09:17,800 --> 00:09:20,760 Speaker 1: P five hundred and my colleague has even quoted you 185 00:09:20,760 --> 00:09:22,720 Speaker 1: in a story saying that would be an all hands 186 00:09:22,720 --> 00:09:25,640 Speaker 1: on deck kind of trading situation. How would you think 187 00:09:25,679 --> 00:09:29,640 Speaker 1: about that approach? You know, smp uh the way they 188 00:09:30,160 --> 00:09:32,760 Speaker 1: handle that. There is an index committee and they will 189 00:09:32,760 --> 00:09:35,720 Speaker 1: determine when you know, Tesla is at it. If it 190 00:09:35,800 --> 00:09:37,480 Speaker 1: is at it, I assume that at some point it 191 00:09:37,520 --> 00:09:39,360 Speaker 1: will be at it. You know, if you look at 192 00:09:39,360 --> 00:09:42,880 Speaker 1: the US equities right now, you would say that Tesla 193 00:09:42,960 --> 00:09:45,400 Speaker 1: is probably an outlier in terms of if you're looking 194 00:09:45,440 --> 00:09:48,320 Speaker 1: at the five SMP five hundred UM, I think the 195 00:09:48,360 --> 00:09:50,440 Speaker 1: minimum market cap to get in there is a little 196 00:09:50,440 --> 00:09:53,880 Speaker 1: over eight billion dollars, and currently Tesla is a three 197 00:09:53,960 --> 00:09:57,240 Speaker 1: hundred and forty five billion dollar company, you know, a 198 00:09:57,320 --> 00:10:01,120 Speaker 1: stock that's up three year to date. And so the 199 00:10:01,160 --> 00:10:03,800 Speaker 1: only reason it wasn't included was one of the criteria 200 00:10:03,840 --> 00:10:06,800 Speaker 1: that SNP has is that it has to have uh, 201 00:10:06,840 --> 00:10:09,880 Speaker 1: you know, positive earnings for four quarters, and it's just 202 00:10:10,040 --> 00:10:13,400 Speaker 1: crossed that threshold, right, it just crossed that hurdle. Yeah, yeah, 203 00:10:13,400 --> 00:10:16,040 Speaker 1: a little while ago. So now it's available, So it 204 00:10:16,200 --> 00:10:20,400 Speaker 1: is potentially a candidate for inclusion, and as I mentioned, 205 00:10:20,440 --> 00:10:22,360 Speaker 1: we just don't know when that is. But in terms of, 206 00:10:22,679 --> 00:10:25,400 Speaker 1: you know, the potential for an ad like like Tesla, 207 00:10:26,000 --> 00:10:28,600 Speaker 1: I mean it would be one of the biggest ads 208 00:10:28,679 --> 00:10:31,040 Speaker 1: ever in terms of notional I think it would be 209 00:10:31,080 --> 00:10:33,200 Speaker 1: the biggest In terms of weight in the index. I 210 00:10:33,200 --> 00:10:38,120 Speaker 1: think maybe Berkshire when it acquired Burlington Northern might have 211 00:10:38,120 --> 00:10:41,000 Speaker 1: had a bigger weight in the index. But it would 212 00:10:41,000 --> 00:10:44,079 Speaker 1: require indexes would roughly need to buy thirty five to 213 00:10:44,160 --> 00:10:48,560 Speaker 1: forty billion dollars worth of Tesla or roughly twenty five 214 00:10:48,640 --> 00:10:51,319 Speaker 1: million shares, so that would immediately put Tesla as a 215 00:10:51,400 --> 00:10:55,840 Speaker 1: top sort of fifteen name in the index. And UM 216 00:10:55,880 --> 00:10:59,079 Speaker 1: when large names have been added in the past, SMP 217 00:10:59,360 --> 00:11:02,920 Speaker 1: has looked for potentially corporate actions that may have had 218 00:11:02,920 --> 00:11:05,880 Speaker 1: a big cash component. So, uh, if if I'm a 219 00:11:05,920 --> 00:11:09,360 Speaker 1: five manager and I know, for example, that there's a 220 00:11:09,400 --> 00:11:13,199 Speaker 1: corporate action coming up. So for example, when Twitter was added, UM, 221 00:11:13,240 --> 00:11:18,319 Speaker 1: it was back in June and Bear was acquiring Monsanto, 222 00:11:18,480 --> 00:11:20,960 Speaker 1: and there was a huge component of that corporate action 223 00:11:21,080 --> 00:11:25,280 Speaker 1: involved cash, so they you know, Monsanto left the benchmark 224 00:11:25,360 --> 00:11:27,560 Speaker 1: and then you know, if you're managing money, you could 225 00:11:27,559 --> 00:11:30,000 Speaker 1: take the proceeds you got from this corporate action and 226 00:11:30,080 --> 00:11:32,880 Speaker 1: use that to buy Twitter. So it helped to minimize 227 00:11:32,920 --> 00:11:35,440 Speaker 1: kind of the turnover in the index. If we look 228 00:11:35,480 --> 00:11:37,840 Speaker 1: out towards the end of this year, there really are 229 00:11:37,920 --> 00:11:40,880 Speaker 1: no corporate actions that you would say there's a huge 230 00:11:40,880 --> 00:11:43,360 Speaker 1: cash component to it, so we could maybe that might 231 00:11:43,400 --> 00:11:45,920 Speaker 1: be the date that SMP decides to add it. They 232 00:11:45,960 --> 00:11:48,840 Speaker 1: also have the ability to maybe add it um you 233 00:11:48,840 --> 00:11:53,920 Speaker 1: know at the September quarterly rebounds. UM. So those are 234 00:11:53,960 --> 00:11:57,000 Speaker 1: options available, you know, in terms of the trade itself, 235 00:11:57,280 --> 00:12:00,320 Speaker 1: we obviously will be very much involved. Um you know 236 00:12:00,679 --> 00:12:04,640 Speaker 1: previously large names that got added to the SMP five hundred. 237 00:12:04,720 --> 00:12:07,800 Speaker 1: Sometimes the issuers will decide that they themselves are going 238 00:12:07,800 --> 00:12:10,120 Speaker 1: to do a secondary offering to offset some of the 239 00:12:10,160 --> 00:12:13,680 Speaker 1: indexing demand. So if we look back, you know, over 240 00:12:13,720 --> 00:12:16,439 Speaker 1: the years, I think Facebook and Google did something like that. 241 00:12:16,880 --> 00:12:20,160 Speaker 1: So if if Tesla was in a situation where they felt, hey, 242 00:12:20,160 --> 00:12:22,280 Speaker 1: we we could uh you know, we could do with 243 00:12:22,360 --> 00:12:24,680 Speaker 1: the proceeds and for whatever they wanted to use them for, 244 00:12:25,200 --> 00:12:27,120 Speaker 1: they may decide to do something like that. Now I 245 00:12:27,120 --> 00:12:29,040 Speaker 1: have not heard that that's the case, but that's that's 246 00:12:29,080 --> 00:12:32,960 Speaker 1: the potential. This just comes to in a bigger topic, 247 00:12:33,000 --> 00:12:35,280 Speaker 1: which is how companies get in and out of the index. 248 00:12:35,840 --> 00:12:40,360 Speaker 1: You run this massive fund, and there's this feeling and 249 00:12:40,800 --> 00:12:43,040 Speaker 1: argument that comes up once in a while that once 250 00:12:43,080 --> 00:12:45,559 Speaker 1: the stock gets into your fund, which is the SMP 251 00:12:45,640 --> 00:12:49,280 Speaker 1: five hundred or the total market, it's like it can relax, Right, 252 00:12:49,400 --> 00:12:51,960 Speaker 1: it's now got all this constant bid coming, gets all 253 00:12:52,000 --> 00:12:56,040 Speaker 1: the flows. But there's many cases of companies getting kicked 254 00:12:56,040 --> 00:13:00,080 Speaker 1: out of the SMP. Right, So Macy's went after it 255 00:13:00,080 --> 00:13:03,199 Speaker 1: at it went down, it's now out. Do you sort 256 00:13:03,240 --> 00:13:06,280 Speaker 1: of feel like you're downstream from the choices that active 257 00:13:06,280 --> 00:13:09,280 Speaker 1: managers make? Um Or is there some truth to the 258 00:13:09,320 --> 00:13:11,360 Speaker 1: fact that once you get into the SMP there is 259 00:13:11,400 --> 00:13:14,560 Speaker 1: a a sense that you've got a more comfortable life 260 00:13:14,600 --> 00:13:17,120 Speaker 1: as a company. Yeah, I'm not sure i'd buy that, 261 00:13:17,240 --> 00:13:19,199 Speaker 1: Eric Um. You know, if if we look right now, 262 00:13:19,240 --> 00:13:20,920 Speaker 1: for example, at the S and P year to date, 263 00:13:20,920 --> 00:13:22,520 Speaker 1: I mean, you're going to have companies that are up. 264 00:13:22,840 --> 00:13:25,320 Speaker 1: You know, if I look at Navidio up up year 265 00:13:25,360 --> 00:13:28,000 Speaker 1: to date, you know, PayPal up. You know, in the 266 00:13:28,040 --> 00:13:30,920 Speaker 1: eighties you've got Amazon up. And then the other end 267 00:13:30,920 --> 00:13:32,480 Speaker 1: of it, you've got some of the cruise lines that 268 00:13:32,520 --> 00:13:36,880 Speaker 1: are down seventy. So these names, I think you'd be 269 00:13:36,920 --> 00:13:39,160 Speaker 1: hard pressed to make the argument that those, you know, 270 00:13:39,240 --> 00:13:41,360 Speaker 1: either the ones that are doing well or the ones 271 00:13:41,400 --> 00:13:43,960 Speaker 1: that are underperforming the market, that they were quite content 272 00:13:44,000 --> 00:13:46,360 Speaker 1: just to get in there and and sit back. So 273 00:13:46,400 --> 00:13:49,280 Speaker 1: I'm not sure I buy that. I would say that. 274 00:13:49,360 --> 00:13:52,600 Speaker 1: You know, if you think about all passive investors in total, 275 00:13:53,080 --> 00:13:57,479 Speaker 1: we maybe represent the shares outstanding in terms of the ownership. 276 00:13:57,840 --> 00:14:01,400 Speaker 1: So keep in mind that's SEV roughly as non passive investors. 277 00:14:01,400 --> 00:14:05,120 Speaker 1: So I think things like price discovery very healthy. Um, 278 00:14:05,160 --> 00:14:07,200 Speaker 1: you know, yes, we are priced takers. I'm not sure 279 00:14:07,320 --> 00:14:10,559 Speaker 1: that's always a bad thing. We represent roughly five percent 280 00:14:10,600 --> 00:14:13,320 Speaker 1: of the daily trading for indexing. You know that that's 281 00:14:13,360 --> 00:14:16,120 Speaker 1: a relatively small number, So I think there's certainly a 282 00:14:16,120 --> 00:14:19,520 Speaker 1: lot of positives I think by being included in the index. 283 00:14:19,560 --> 00:14:22,120 Speaker 1: If you think about it from our perspective, we're the 284 00:14:22,160 --> 00:14:26,400 Speaker 1: ultimate holder. We're going to hold this these stocks, you know, forever, 285 00:14:26,520 --> 00:14:29,280 Speaker 1: potentially as long as they remain in the index, and 286 00:14:29,360 --> 00:14:32,880 Speaker 1: so our investment stewardship group, uh, you know, it's in 287 00:14:32,920 --> 00:14:35,960 Speaker 1: their best interest and in our shareholders best interest. These 288 00:14:35,960 --> 00:14:38,400 Speaker 1: guys basically are going to reach out to these issuers 289 00:14:38,440 --> 00:14:41,040 Speaker 1: to make sure that things like board composition, you know, 290 00:14:41,320 --> 00:14:46,200 Speaker 1: corporate governance, executive compensation, you know, how they think about strategy, 291 00:14:46,600 --> 00:14:48,720 Speaker 1: these types of things that are going to ensure that 292 00:14:48,760 --> 00:14:50,920 Speaker 1: these companies are going to be around for a long time. 293 00:14:51,440 --> 00:14:53,000 Speaker 1: So these are some of the things that I think 294 00:14:53,000 --> 00:14:56,160 Speaker 1: are really benefits from being in an index. We just 295 00:14:56,160 --> 00:14:58,120 Speaker 1: talked about defense. These are things you have to do 296 00:14:58,200 --> 00:15:01,160 Speaker 1: just to make sure you don't slip. But when you 297 00:15:01,200 --> 00:15:05,520 Speaker 1: think about a passive fund, it should miss the index 298 00:15:05,920 --> 00:15:09,040 Speaker 1: by the exact amount of the expense ratio if you 299 00:15:09,120 --> 00:15:11,680 Speaker 1: do your job well. We study this a lot. We 300 00:15:11,920 --> 00:15:14,480 Speaker 1: called the game of basis points and the unsung art 301 00:15:14,560 --> 00:15:18,080 Speaker 1: of actually doing better than the expense ratio. So tracking 302 00:15:18,080 --> 00:15:20,760 Speaker 1: difference would be the amount you miss and in many 303 00:15:20,840 --> 00:15:23,400 Speaker 1: funds that amount is less than the expense ratio, which 304 00:15:23,400 --> 00:15:27,240 Speaker 1: you could say is a rebate. So for example, your 305 00:15:27,520 --> 00:15:30,440 Speaker 1: your total market UM, that's the biggest fund in the 306 00:15:30,480 --> 00:15:33,840 Speaker 1: world vt I. Right, you miss the index by about 307 00:15:33,840 --> 00:15:36,880 Speaker 1: one point five basis points, but the fee is four 308 00:15:36,880 --> 00:15:41,000 Speaker 1: bibs got two point five basis points that you made 309 00:15:41,040 --> 00:15:45,880 Speaker 1: up on offense. Can you break down how that happens? Sure? So, um, 310 00:15:46,120 --> 00:15:48,320 Speaker 1: if we look at that two and a half basis points, 311 00:15:48,360 --> 00:15:50,760 Speaker 1: there's there's a number of different things that go into 312 00:15:50,800 --> 00:15:54,240 Speaker 1: that number. I would say security lending is a piece 313 00:15:54,240 --> 00:15:56,800 Speaker 1: of it. So you know, brokers who are looking to 314 00:15:56,920 --> 00:15:59,720 Speaker 1: borrow stock from Vanguard, they'll call us and deal with 315 00:15:59,760 --> 00:16:02,680 Speaker 1: our sect loan area. It is kind of an area 316 00:16:02,720 --> 00:16:04,880 Speaker 1: that's separate from the desk, but we work very closely 317 00:16:04,920 --> 00:16:07,440 Speaker 1: with those guys in terms of you know, names that 318 00:16:07,480 --> 00:16:10,640 Speaker 1: they're loaning out and things like that. There's also the 319 00:16:10,760 --> 00:16:13,520 Speaker 1: day to day trading cash flows, and there's the rebalances 320 00:16:13,560 --> 00:16:15,880 Speaker 1: that we have on a quarterly basis, which we've been 321 00:16:15,880 --> 00:16:18,320 Speaker 1: doing for for quite some time. I'm a very experienced 322 00:16:18,320 --> 00:16:21,600 Speaker 1: team working on those. Those are opportunities to add value 323 00:16:22,160 --> 00:16:25,400 Speaker 1: syndicate process. You know, obviously companies, you know, every day 324 00:16:25,480 --> 00:16:29,120 Speaker 1: after four o'clock the phones will start ringing with brokers 325 00:16:29,120 --> 00:16:31,160 Speaker 1: telling us that they have a syndicate offering. And because 326 00:16:31,200 --> 00:16:33,080 Speaker 1: we show up as kind of a page one holder 327 00:16:33,480 --> 00:16:36,720 Speaker 1: on Bloomberg, they're gonna want to know are we do 328 00:16:36,800 --> 00:16:40,360 Speaker 1: we want to participate in the syndicate offering. And you know, 329 00:16:40,440 --> 00:16:43,560 Speaker 1: most times the index provider is going to make the 330 00:16:43,640 --> 00:16:46,080 Speaker 1: change the following day, so we'll do in analysis. Does 331 00:16:46,120 --> 00:16:48,480 Speaker 1: this make sense that we need to, you know, maintain 332 00:16:48,560 --> 00:16:51,280 Speaker 1: our weight and is it sufficiently large where the index 333 00:16:51,320 --> 00:16:53,680 Speaker 1: is going to make the change, And we'll go in 334 00:16:53,760 --> 00:16:55,800 Speaker 1: on those the ones that we think are appropriate to 335 00:16:55,800 --> 00:16:59,000 Speaker 1: go in on. And as long as the price that 336 00:16:59,080 --> 00:17:01,440 Speaker 1: we buy it at, you know, is below the closing price. 337 00:17:01,480 --> 00:17:03,840 Speaker 1: When the index is added, it's incremental value. It might 338 00:17:03,880 --> 00:17:06,360 Speaker 1: be fractions of a basis point, but that will add 339 00:17:06,440 --> 00:17:08,800 Speaker 1: up over time. Erica. So I would say the combination 340 00:17:08,880 --> 00:17:13,879 Speaker 1: of of of sect landing, syndicate process, working index changes 341 00:17:13,920 --> 00:17:16,480 Speaker 1: weren't working complex corporate actions. You know, there's plenty of 342 00:17:16,560 --> 00:17:20,439 Speaker 1: corporate actions that they're they're not easy in terms of 343 00:17:21,000 --> 00:17:23,359 Speaker 1: you know, some of them are mandatory, which are pretty straightforward, 344 00:17:23,359 --> 00:17:25,880 Speaker 1: but there's a lot where you get to elect and 345 00:17:25,920 --> 00:17:28,159 Speaker 1: you know, what's the what percentage should we go for 346 00:17:28,240 --> 00:17:30,800 Speaker 1: stock on this deal versus cash? And you're getting feedback 347 00:17:30,800 --> 00:17:32,600 Speaker 1: from our brokers to say, hey, this is what we 348 00:17:32,680 --> 00:17:34,639 Speaker 1: think most people are going to do, and then we 349 00:17:34,720 --> 00:17:37,159 Speaker 1: decide this is what we think is appropriate for us, 350 00:17:37,160 --> 00:17:40,280 Speaker 1: and then figuring out what we elect and then what 351 00:17:40,400 --> 00:17:42,679 Speaker 1: the probation will be and how index providers are going 352 00:17:42,720 --> 00:17:45,879 Speaker 1: to handle that. There is the potential to add fractions 353 00:17:45,920 --> 00:17:47,880 Speaker 1: of a basis point over the course of a year 354 00:17:47,880 --> 00:17:49,760 Speaker 1: when you do that, and obviously, you know, having an 355 00:17:49,800 --> 00:17:53,040 Speaker 1: experienced team doesn't hurt. And I know these numbers get 356 00:17:53,040 --> 00:17:55,760 Speaker 1: so small when you talk basis points, but we convert 357 00:17:55,840 --> 00:17:58,359 Speaker 1: the we multiply that savings by the assets and you're 358 00:17:58,400 --> 00:18:00,600 Speaker 1: looking at for your one and it might be in 359 00:18:00,600 --> 00:18:04,600 Speaker 1: the ballpark of twenty million dollars returned or rebated back 360 00:18:04,960 --> 00:18:07,040 Speaker 1: if you look at all the SMP five hundred ETFs 361 00:18:07,080 --> 00:18:10,400 Speaker 1: and index funds they returned about twenty three So if 362 00:18:10,400 --> 00:18:12,440 Speaker 1: you add it all up, passive managers maybe getting the 363 00:18:12,440 --> 00:18:16,240 Speaker 1: neighborhood of a hundred million put back into the fund. 364 00:18:16,359 --> 00:18:20,520 Speaker 1: Which is interesting also because the sec lending is typically 365 00:18:20,680 --> 00:18:23,560 Speaker 1: lending stocks to hedge funds, so you're taking money from 366 00:18:23,560 --> 00:18:26,439 Speaker 1: them and then you're playing defense against them. So in 367 00:18:26,480 --> 00:18:29,160 Speaker 1: a weird way, it's sort of transferring money from hedge 368 00:18:29,160 --> 00:18:32,080 Speaker 1: funds to the to the little guy, which is rare 369 00:18:32,119 --> 00:18:35,840 Speaker 1: and perhaps refreshing that that that happens. And I guess 370 00:18:35,880 --> 00:18:38,439 Speaker 1: I just ask you, do you find the people notice 371 00:18:38,480 --> 00:18:41,600 Speaker 1: this like doesn't get much press attention. Um, that's what 372 00:18:41,720 --> 00:18:45,080 Speaker 1: we call it unsung. Yeah, internally we we you know, 373 00:18:45,119 --> 00:18:47,760 Speaker 1: I mentioned that we get a report every every morning 374 00:18:47,800 --> 00:18:49,840 Speaker 1: around ten o'clock to let us know how the fund 375 00:18:49,880 --> 00:18:52,920 Speaker 1: was doing. Uh And and obviously the first column that 376 00:18:53,000 --> 00:18:55,120 Speaker 1: I go to is is the value add in terms 377 00:18:55,119 --> 00:18:57,920 Speaker 1: of you know, how is my fundne you know, week 378 00:18:57,960 --> 00:19:00,480 Speaker 1: to date, month to day, year to date versus the inchmark. 379 00:19:00,920 --> 00:19:04,320 Speaker 1: And so we would know right up until and that's 380 00:19:04,400 --> 00:19:07,840 Speaker 1: what everyone focuses on. And and um, you know, so 381 00:19:08,040 --> 00:19:09,879 Speaker 1: among the desk, it's a badge of honor if we 382 00:19:09,960 --> 00:19:13,880 Speaker 1: can kind of incrementally add value for our shareholders. So 383 00:19:14,000 --> 00:19:16,639 Speaker 1: it's something that we focus on a lot, you know, 384 00:19:16,680 --> 00:19:19,280 Speaker 1: And I think it's not just the expense ratio. While 385 00:19:19,280 --> 00:19:22,480 Speaker 1: the expense ratio is incredibly important and probably a great 386 00:19:22,480 --> 00:19:25,560 Speaker 1: first filter, you know, obviously the lower expense ratio. Vanguard 387 00:19:25,600 --> 00:19:27,840 Speaker 1: has been beating that drum for for forty odd years. 388 00:19:28,359 --> 00:19:30,400 Speaker 1: I think other things that come into play are things 389 00:19:30,480 --> 00:19:34,480 Speaker 1: like that tracking difference and uh you know, obviously benchmark 390 00:19:34,680 --> 00:19:37,400 Speaker 1: uh can can differ a little bit as well. So 391 00:19:37,480 --> 00:19:40,120 Speaker 1: some of those other things will will come into but 392 00:19:40,119 --> 00:19:42,440 Speaker 1: but tracking error is something that we are very much, 393 00:19:43,000 --> 00:19:51,560 Speaker 1: you know, on top of you. So, Jerry, you brought 394 00:19:51,600 --> 00:19:54,280 Speaker 1: up the scorecard a couple of times, and I gotta 395 00:19:54,359 --> 00:19:58,080 Speaker 1: ask you, what's it look like so far this year? UM, 396 00:19:58,160 --> 00:20:01,040 Speaker 1: I would say the numbers that are mentioned earlier, I 397 00:20:01,040 --> 00:20:05,000 Speaker 1: would say, uh, is it looks like it's going to 398 00:20:05,040 --> 00:20:08,320 Speaker 1: be on on course for that again. So another another 399 00:20:08,320 --> 00:20:12,439 Speaker 1: good year, UM in terms of performance. So despite everything 400 00:20:12,480 --> 00:20:15,840 Speaker 1: that happened, uh, you know, back I would say in March, UM, 401 00:20:16,359 --> 00:20:18,520 Speaker 1: there were some of the rebounces were canceled due to 402 00:20:18,560 --> 00:20:20,560 Speaker 1: the fact that you know, people were just starting to 403 00:20:20,600 --> 00:20:23,080 Speaker 1: go home for the first time working from home. There 404 00:20:23,119 --> 00:20:25,760 Speaker 1: was some questions around, hey, you know, is this the 405 00:20:25,840 --> 00:20:27,560 Speaker 1: right thing to do, But I absolutely think it was 406 00:20:27,600 --> 00:20:29,320 Speaker 1: the right thing to do at that time based on 407 00:20:29,440 --> 00:20:33,359 Speaker 1: the environment. But you also saw that trading costs, the 408 00:20:33,440 --> 00:20:36,960 Speaker 1: spreads on stocks, the amount of of liquidity that was 409 00:20:37,000 --> 00:20:40,240 Speaker 1: available kind of disappeared back in March. UM, So it 410 00:20:40,320 --> 00:20:42,919 Speaker 1: was a very um you know in terms of you know, 411 00:20:42,920 --> 00:20:46,560 Speaker 1: I've been trading for twenty five odd years, um, that 412 00:20:46,680 --> 00:20:49,959 Speaker 1: was that was pretty bad time to be to be trading, 413 00:20:50,000 --> 00:20:52,920 Speaker 1: because I would say most people, if you had kind 414 00:20:52,920 --> 00:20:55,280 Speaker 1: of plugged in, you know, what are my cost estimates 415 00:20:55,320 --> 00:20:58,000 Speaker 1: for trading this list, the reality was maybe two to 416 00:20:58,080 --> 00:21:01,199 Speaker 1: three times what the what the expected costs would be 417 00:21:01,240 --> 00:21:03,680 Speaker 1: based on the fact that just all of the whole 418 00:21:04,080 --> 00:21:08,480 Speaker 1: market micro structure had changed so much during during that period. Thankfully, 419 00:21:08,480 --> 00:21:10,480 Speaker 1: we're at a period now where things have calmed down 420 00:21:10,600 --> 00:21:12,520 Speaker 1: and it feels like things have gotten back to normal. 421 00:21:12,920 --> 00:21:15,440 Speaker 1: But even despite that, we were still I would say, 422 00:21:15,480 --> 00:21:16,840 Speaker 1: this is still going to be a very good year 423 00:21:16,880 --> 00:21:19,520 Speaker 1: for us in terms of performance as the benchmark across 424 00:21:19,560 --> 00:21:23,000 Speaker 1: the board. It struck me March especially that must have 425 00:21:23,080 --> 00:21:27,400 Speaker 1: just been a crazy time to be doing what what 426 00:21:27,440 --> 00:21:30,680 Speaker 1: you do. And I'm curious, you know, when you think back, 427 00:21:30,800 --> 00:21:33,119 Speaker 1: You've mentioned, you know, you've been doing this twenty five years, 428 00:21:33,840 --> 00:21:36,560 Speaker 1: and you know you've seen the financial crisis ten plus 429 00:21:36,640 --> 00:21:39,120 Speaker 1: years ago. Now, like, how did that moment in March 430 00:21:39,160 --> 00:21:42,680 Speaker 1: compare with everything else that you've seen? Yeah, I would 431 00:21:42,680 --> 00:21:45,040 Speaker 1: say it was greater than the global financial crisis in 432 00:21:45,119 --> 00:21:47,160 Speaker 1: terms of just the trading it was. I mean there 433 00:21:47,160 --> 00:21:50,520 Speaker 1: were um, you you'd be coming in in the morning 434 00:21:50,520 --> 00:21:52,439 Speaker 1: and wondering if futures were going to go down limit, 435 00:21:53,040 --> 00:21:55,760 Speaker 1: wondering you know, what happened? What what did investors do 436 00:21:55,960 --> 00:21:58,800 Speaker 1: last night? And you know, thankfully, maybe it's the it's 437 00:21:58,800 --> 00:22:00,920 Speaker 1: the type of shareholders we had, but we actually had 438 00:22:01,080 --> 00:22:05,120 Speaker 1: very few of our investors that transacted that got out 439 00:22:05,119 --> 00:22:08,040 Speaker 1: of the market back then, and and um, a very 440 00:22:08,119 --> 00:22:10,919 Speaker 1: very small percentage. So you know, thank God for that, 441 00:22:10,960 --> 00:22:13,399 Speaker 1: because here we are, you know, up from our lows 442 00:22:13,440 --> 00:22:17,359 Speaker 1: on March three. And obviously if you stuck with it, 443 00:22:17,520 --> 00:22:20,760 Speaker 1: you were rewarded for taking on that risk. And probably 444 00:22:20,800 --> 00:22:23,520 Speaker 1: every every fiber in your in your body wanted to say, 445 00:22:23,600 --> 00:22:24,920 Speaker 1: we need to get out because this is going to 446 00:22:24,960 --> 00:22:28,480 Speaker 1: get worse. Um, But that's I think where if you've 447 00:22:28,520 --> 00:22:31,320 Speaker 1: if you've gone through a few of these before periods 448 00:22:31,359 --> 00:22:34,560 Speaker 1: where you've had extreme volatility in the market, probably getting 449 00:22:34,560 --> 00:22:36,480 Speaker 1: out of the market is not the right thing to 450 00:22:36,480 --> 00:22:40,360 Speaker 1: do at that time. Well, you mentioned, um, how sticky 451 00:22:40,560 --> 00:22:43,679 Speaker 1: Vanguard customers are, and you know that's a testament to 452 00:22:44,200 --> 00:22:47,440 Speaker 1: Mr Bogol and you know obviously they're they're probably making 453 00:22:47,640 --> 00:22:50,600 Speaker 1: him very proud right now. Um. But but Jerry, I 454 00:22:50,640 --> 00:22:53,160 Speaker 1: think you might also be making him pretty pretty proud 455 00:22:53,200 --> 00:22:55,600 Speaker 1: because you know you're managing you know, you mentioned the 456 00:22:55,920 --> 00:22:59,840 Speaker 1: three trillion dollar number earlier, but you also oversee the 457 00:23:00,040 --> 00:23:03,800 Speaker 1: world's biggest mutual fund and one of the biggest e 458 00:23:03,920 --> 00:23:06,440 Speaker 1: t f s and and by our account, I think 459 00:23:06,880 --> 00:23:10,560 Speaker 1: you know you're somewhere in the nine hundred billion dollars 460 00:23:11,600 --> 00:23:14,360 Speaker 1: assets under management. Do you ever think about what it's 461 00:23:14,359 --> 00:23:16,840 Speaker 1: gonna be like to hit a trillion which could happen, 462 00:23:16,960 --> 00:23:19,160 Speaker 1: like you know, if the market takes off between now 463 00:23:19,160 --> 00:23:20,520 Speaker 1: and the end of the year, and maybe there's a 464 00:23:20,560 --> 00:23:23,040 Speaker 1: vaccine or something like we we could see you hit 465 00:23:23,080 --> 00:23:25,239 Speaker 1: a trillion dollars this year. Do you do you have 466 00:23:25,280 --> 00:23:28,399 Speaker 1: like an alert set up for that moment? Well, I 467 00:23:28,400 --> 00:23:30,840 Speaker 1: hope We're not tempting fate here because back in February 468 00:23:31,000 --> 00:23:32,960 Speaker 1: that the fund was at around nine thirty and I 469 00:23:32,960 --> 00:23:35,320 Speaker 1: need to tell you what happened over the next month. 470 00:23:35,400 --> 00:23:39,480 Speaker 1: It assets got down below six billion. But yeah, we're 471 00:23:39,560 --> 00:23:42,879 Speaker 1: right around nine fifty billion right now, and um, you know, 472 00:23:42,960 --> 00:23:46,480 Speaker 1: so obviously trillion dollars is not that far away. It's 473 00:23:46,520 --> 00:23:49,120 Speaker 1: it's never been Vanguard's goal to see, hey, we need 474 00:23:49,200 --> 00:23:51,040 Speaker 1: to see if we can get you know, the first 475 00:23:51,240 --> 00:23:53,520 Speaker 1: fund to a trillion dollars. But I think what it 476 00:23:53,680 --> 00:23:57,199 Speaker 1: does show us is that investors have bought into the 477 00:23:57,240 --> 00:24:01,880 Speaker 1: idea of of low cost diversify funds. And obviously, the 478 00:24:02,040 --> 00:24:04,760 Speaker 1: equity portion of a lot of our target date funds 479 00:24:05,040 --> 00:24:08,160 Speaker 1: is total stock markets. So when people you know, sign 480 00:24:08,200 --> 00:24:10,000 Speaker 1: up for their four oh one K or the target 481 00:24:10,040 --> 00:24:11,879 Speaker 1: retirement funds and they say, hey, I want to retire 482 00:24:11,880 --> 00:24:15,119 Speaker 1: in the equity portion of that is total stock So 483 00:24:15,160 --> 00:24:17,160 Speaker 1: I'm the beneficiary of a lot of that cash flow 484 00:24:17,560 --> 00:24:20,800 Speaker 1: that is coming from our target date funds. So that's 485 00:24:21,000 --> 00:24:23,200 Speaker 1: kind of has been a good source of the cash 486 00:24:23,200 --> 00:24:26,240 Speaker 1: flows that are coming into the fund. So you know, when, when, 487 00:24:26,240 --> 00:24:28,600 Speaker 1: when will it happen? I think there's a chance that 488 00:24:28,640 --> 00:24:30,800 Speaker 1: happens later this year, but I I wouldn't want to 489 00:24:30,880 --> 00:24:33,360 Speaker 1: tempt fate and and and to answer your question, yes, 490 00:24:33,400 --> 00:24:36,760 Speaker 1: I think the van the systems folks are well aware that, 491 00:24:37,200 --> 00:24:39,000 Speaker 1: you know, things are going to need to change when 492 00:24:39,040 --> 00:24:40,679 Speaker 1: we hit a trillion, and they're on top of that 493 00:24:40,760 --> 00:24:43,560 Speaker 1: and have been on top of that for some time. Jerry, 494 00:24:43,560 --> 00:24:45,600 Speaker 1: one of the things that makes fan Guard different from 495 00:24:45,600 --> 00:24:47,800 Speaker 1: other e t F issuers is that your e t 496 00:24:48,080 --> 00:24:50,840 Speaker 1: s have this patented structure where they're a share class 497 00:24:50,840 --> 00:24:53,760 Speaker 1: and the mutual funds. How does that make your job 498 00:24:53,880 --> 00:24:57,440 Speaker 1: different than it might be at different kind of e 499 00:24:57,560 --> 00:25:02,320 Speaker 1: t F provider. Yeah, okay, good question. Yeah, so um, 500 00:25:02,359 --> 00:25:03,800 Speaker 1: there's a couple of things I would say on that. 501 00:25:03,960 --> 00:25:07,959 Speaker 1: So um, you know, we sometimes will get calls from 502 00:25:08,000 --> 00:25:11,080 Speaker 1: institutions who maybe they fired another manager and they would 503 00:25:11,080 --> 00:25:13,360 Speaker 1: look to bring money to Vanguard, and they will tell 504 00:25:13,359 --> 00:25:15,320 Speaker 1: you what front, Hey, it's we're looking to find a 505 00:25:15,320 --> 00:25:19,040 Speaker 1: new manager. We just want equity exposure the mutual fund. 506 00:25:19,400 --> 00:25:21,560 Speaker 1: We would not be huge fans of taking that money 507 00:25:21,560 --> 00:25:23,720 Speaker 1: if we knew it was gonna leave a month from 508 00:25:23,720 --> 00:25:26,119 Speaker 1: now or three weeks from now. But obviously, if you 509 00:25:26,119 --> 00:25:27,720 Speaker 1: have an e t F, they're going to pay their 510 00:25:27,720 --> 00:25:29,520 Speaker 1: own freight on the way in. They're paying their own 511 00:25:29,520 --> 00:25:32,760 Speaker 1: transaction costs, you know, bidass spread whatever it might be, 512 00:25:33,200 --> 00:25:36,440 Speaker 1: and maybe even a tiny fee from the the the 513 00:25:36,480 --> 00:25:39,719 Speaker 1: from the the issuer if it's an e t F. 514 00:25:40,119 --> 00:25:42,879 Speaker 1: So for people who are short term, I think the 515 00:25:42,920 --> 00:25:46,080 Speaker 1: e t F is is perfect um and it isolates 516 00:25:46,080 --> 00:25:48,679 Speaker 1: the fund itself, you know, in terms of you know, 517 00:25:48,720 --> 00:25:50,879 Speaker 1: we work closely with with with the folks in our 518 00:25:50,920 --> 00:25:52,879 Speaker 1: Capital markets group who kind of run the e t F. 519 00:25:53,480 --> 00:25:55,240 Speaker 1: You know, I think there's great benefits in terms of 520 00:25:55,280 --> 00:25:57,320 Speaker 1: index changes. We talked about some of the changes that 521 00:25:57,359 --> 00:26:00,200 Speaker 1: potentially can happen when you have cash flows coming into 522 00:26:00,240 --> 00:26:02,560 Speaker 1: the fund. It means sometimes that you don't need to 523 00:26:02,560 --> 00:26:04,600 Speaker 1: sell because you can take advantage of that cash flow 524 00:26:04,680 --> 00:26:06,600 Speaker 1: to buy the ads that are coming into the index. 525 00:26:07,000 --> 00:26:09,560 Speaker 1: So we think that that structure works well. You know, 526 00:26:09,640 --> 00:26:13,440 Speaker 1: I remember when we started vt I, you know, um 527 00:26:13,520 --> 00:26:16,240 Speaker 1: and looking at the volume and celebrate when it when 528 00:26:16,240 --> 00:26:18,760 Speaker 1: over ten thousand shares traded in one day. And now 529 00:26:18,800 --> 00:26:22,359 Speaker 1: it's an incredibly liquid vehicle. You know, there are times 530 00:26:22,400 --> 00:26:25,200 Speaker 1: when for example, I need cash coming into my fund. 531 00:26:25,240 --> 00:26:28,280 Speaker 1: For example, if I have ex dividends going out and 532 00:26:28,359 --> 00:26:31,400 Speaker 1: I can elect rather than receiving stocks into the fund, 533 00:26:31,480 --> 00:26:33,920 Speaker 1: perhaps it might be more beneficial for me to receive 534 00:26:34,520 --> 00:26:37,439 Speaker 1: cash and then use that cash to to to fund 535 00:26:37,640 --> 00:26:40,719 Speaker 1: the dividends. So there are lots of benefits to it, 536 00:26:40,840 --> 00:26:44,120 Speaker 1: and and it works really well for us. And how 537 00:26:44,200 --> 00:26:48,360 Speaker 1: much of your job now is automated? And are there 538 00:26:48,440 --> 00:26:54,200 Speaker 1: aspects of it that you see becoming automated over time? Yeah? 539 00:26:54,200 --> 00:26:57,360 Speaker 1: I mean if I look back on you know, started 540 00:26:57,359 --> 00:27:00,640 Speaker 1: when I started advaning gard, actually one of the people 541 00:27:01,240 --> 00:27:03,439 Speaker 1: on the desk brought in a floppy disk this morning 542 00:27:03,800 --> 00:27:06,280 Speaker 1: as a as a coaster, you know, as for as 543 00:27:06,280 --> 00:27:08,760 Speaker 1: the holder coffee on, just as a joke. And we 544 00:27:08,840 --> 00:27:10,480 Speaker 1: have people on the desk we actually had never seen 545 00:27:10,520 --> 00:27:12,520 Speaker 1: it before. And if I think back to the early days, 546 00:27:12,960 --> 00:27:15,440 Speaker 1: we had one dot machine on the desk that we 547 00:27:15,480 --> 00:27:18,280 Speaker 1: would use to send trades down to the floor. Very 548 00:27:18,400 --> 00:27:21,840 Speaker 1: very different today obviously, um, in terms of the technology 549 00:27:21,920 --> 00:27:25,280 Speaker 1: available to us. Wait, you mean Vanguard's not running on 550 00:27:25,320 --> 00:27:29,400 Speaker 1: floppy disks right now, We're not. We're not running back 551 00:27:29,440 --> 00:27:33,080 Speaker 1: in the in the early nineties, uh disks where how 552 00:27:33,200 --> 00:27:35,200 Speaker 1: you you know, you saved your program and sent it down. 553 00:27:35,280 --> 00:27:39,400 Speaker 1: But uh, now obviously you know, incredible amount of attention 554 00:27:39,480 --> 00:27:42,159 Speaker 1: is paid to technology in terms of let's see what 555 00:27:42,280 --> 00:27:44,840 Speaker 1: are the manual chores that we used to do that 556 00:27:44,880 --> 00:27:47,639 Speaker 1: they are now just fully automated in terms of you know, 557 00:27:47,680 --> 00:27:49,359 Speaker 1: we used to back in the day you would have 558 00:27:49,400 --> 00:27:52,000 Speaker 1: compare reports which would compare what we knew in the 559 00:27:52,040 --> 00:27:55,920 Speaker 1: portfolio versus what what what the bank the custodian knew. 560 00:27:56,280 --> 00:27:57,959 Speaker 1: Now you know, we have reports that come in and 561 00:27:58,160 --> 00:28:00,720 Speaker 1: it'll it'll just automatically tell you in there here's a 562 00:28:00,760 --> 00:28:03,000 Speaker 1: break between you and the custodian and is it as 563 00:28:03,040 --> 00:28:05,080 Speaker 1: a as a result of maybe a corporate action or 564 00:28:05,119 --> 00:28:07,359 Speaker 1: what's the reason for it, and you can immediately focus 565 00:28:07,400 --> 00:28:09,200 Speaker 1: on it. Whereas before you were looking at these green 566 00:28:09,200 --> 00:28:12,639 Speaker 1: bar reports. Today, I mean we have obviously so we 567 00:28:12,680 --> 00:28:15,160 Speaker 1: have trading desks here in Malvern, also in the UK 568 00:28:15,520 --> 00:28:19,880 Speaker 1: and in Australia, so we have, you know, trading systems 569 00:28:19,920 --> 00:28:22,760 Speaker 1: where we have consistency of data. We can pass the 570 00:28:22,800 --> 00:28:25,720 Speaker 1: trade around in terms of if we have global portfolios, 571 00:28:25,760 --> 00:28:28,080 Speaker 1: we can start it in in in Asia, then move 572 00:28:28,080 --> 00:28:29,959 Speaker 1: it to Europe and then come back to North America. 573 00:28:30,000 --> 00:28:31,639 Speaker 1: For the guys who are working kind of on the 574 00:28:31,680 --> 00:28:35,399 Speaker 1: international side, and so they just have consistency of data 575 00:28:35,800 --> 00:28:38,600 Speaker 1: and great insights into terms of things like tracking er 576 00:28:38,760 --> 00:28:40,479 Speaker 1: like I know, for example, when I go home at 577 00:28:40,480 --> 00:28:43,280 Speaker 1: five o'clock, Um, I'm going to sign off as the 578 00:28:43,320 --> 00:28:45,800 Speaker 1: portfolio manager. We also have risk folks who are going 579 00:28:45,840 --> 00:28:49,000 Speaker 1: to sign off, and we have a death supervisor who 580 00:28:49,040 --> 00:28:51,560 Speaker 1: will sign off and they can see exactly that based 581 00:28:51,600 --> 00:28:54,520 Speaker 1: on all the information available at five o'clock, here's where 582 00:28:54,480 --> 00:28:57,560 Speaker 1: you're expected X anti tracking error is we never had 583 00:28:57,600 --> 00:28:59,400 Speaker 1: that kind of insight, I would say ten or fifteen 584 00:28:59,440 --> 00:29:02,720 Speaker 1: years ago, but now we do. And um, you know. So, 585 00:29:02,720 --> 00:29:04,800 Speaker 1: so the type of insights like I can look at 586 00:29:04,840 --> 00:29:07,960 Speaker 1: total stock, which is, you know, stocks in the portfolio, 587 00:29:08,000 --> 00:29:10,920 Speaker 1: and I can see which stock do I have my 588 00:29:10,960 --> 00:29:14,560 Speaker 1: biggest misswait first demention mark and what how is that 589 00:29:14,600 --> 00:29:17,280 Speaker 1: going to impact, if at all, my tracking error and 590 00:29:17,600 --> 00:29:19,840 Speaker 1: so really good insights that will help us to kind 591 00:29:19,880 --> 00:29:21,720 Speaker 1: of track even tighter than we have in the past. 592 00:29:22,560 --> 00:29:25,400 Speaker 1: Speaking of that, UM, I just have a quick anecdote. 593 00:29:25,400 --> 00:29:29,360 Speaker 1: I went to interviewed Jack Bogel back maybe five years ago, 594 00:29:29,800 --> 00:29:31,240 Speaker 1: and I asked him about some of this game of 595 00:29:31,280 --> 00:29:33,960 Speaker 1: basis points stuff. And if you look at the Vanguard 596 00:29:33,960 --> 00:29:37,600 Speaker 1: five hundred fund in nine, the tracking difference was sixty 597 00:29:37,600 --> 00:29:40,840 Speaker 1: five basis points and the fee was forty six, so 598 00:29:40,880 --> 00:29:44,400 Speaker 1: it actually was worse than the fee, So bad job. Um. 599 00:29:44,440 --> 00:29:47,680 Speaker 1: And he was telling me that back then they had 600 00:29:47,720 --> 00:29:49,880 Speaker 1: a woman doing They sent it to a woman who 601 00:29:49,880 --> 00:29:52,280 Speaker 1: had a part time job somewhere else, like I believe, 602 00:29:52,320 --> 00:29:54,560 Speaker 1: like I want to say it a mattress company or something. 603 00:29:54,640 --> 00:29:57,600 Speaker 1: But anyway, over the years that it's amazing to see 604 00:29:57,640 --> 00:30:00,440 Speaker 1: that chart, the fee fell and the tracking improved to 605 00:30:00,480 --> 00:30:02,600 Speaker 1: the point where it's now, you know, one point five 606 00:30:02,600 --> 00:30:06,560 Speaker 1: basis points. But anyway, just a um anecdote there, and 607 00:30:06,560 --> 00:30:08,840 Speaker 1: then I just want to pivot to a question Morgan 608 00:30:09,120 --> 00:30:11,480 Speaker 1: Barne on my team had, which is a good one 609 00:30:11,520 --> 00:30:13,840 Speaker 1: to ask a lot of people, which is what keeps 610 00:30:13,880 --> 00:30:16,120 Speaker 1: you up at night as we look forward, uh, you 611 00:30:16,160 --> 00:30:18,800 Speaker 1: know into the next couple of years, what keeps me 612 00:30:18,880 --> 00:30:21,560 Speaker 1: up at night. So I would say that we have 613 00:30:22,200 --> 00:30:24,880 Speaker 1: we're fortunate in that we have a really, really good 614 00:30:25,120 --> 00:30:27,880 Speaker 1: team on the desk. Uh. You know, I mentioned earlier 615 00:30:27,920 --> 00:30:30,520 Speaker 1: that we've probably the average tenure is about fourteen years. 616 00:30:31,080 --> 00:30:34,160 Speaker 1: And you know, when I sign off in the evening, 617 00:30:34,200 --> 00:30:36,520 Speaker 1: after we've done all the trading at four o'clock. We've 618 00:30:36,560 --> 00:30:39,240 Speaker 1: processed everything. I get a chance to go through my 619 00:30:39,320 --> 00:30:41,840 Speaker 1: portfolio and make sure that it's right where I think 620 00:30:41,840 --> 00:30:44,160 Speaker 1: it should be. I'm going to sign off on that. 621 00:30:44,360 --> 00:30:46,120 Speaker 1: And we also have a risk team that's going to 622 00:30:46,200 --> 00:30:49,000 Speaker 1: sign off on that, and we also have a death 623 00:30:49,040 --> 00:30:51,200 Speaker 1: supervisor who will sign up. So there's almost three sets 624 00:30:51,200 --> 00:30:55,040 Speaker 1: of eyes looking at every single portfolio. You know that 625 00:30:55,160 --> 00:30:58,200 Speaker 1: you're tracking error, your ex anti tracking error is within 626 00:30:58,280 --> 00:31:01,800 Speaker 1: acceptable whatever the limit might be. UM, and you can 627 00:31:01,960 --> 00:31:05,080 Speaker 1: feel when you leave that everything is in pretty good shape. 628 00:31:05,080 --> 00:31:07,239 Speaker 1: Now that's not saying there are days we come in 629 00:31:07,240 --> 00:31:09,840 Speaker 1: that the following morning and find out, hey, by the way, 630 00:31:10,080 --> 00:31:13,360 Speaker 1: you know, a portfolio brought in fifty million dollars. We 631 00:31:13,360 --> 00:31:15,640 Speaker 1: were not aware of it. That's a that's a different 632 00:31:15,640 --> 00:31:18,720 Speaker 1: ball game. But we have systems in place. We have 633 00:31:19,080 --> 00:31:21,360 Speaker 1: lots of eyes looking at portfolios at the end of 634 00:31:21,400 --> 00:31:23,520 Speaker 1: the day. So by the time I get home and 635 00:31:23,520 --> 00:31:25,200 Speaker 1: take the dog for a walk, I think I can 636 00:31:25,320 --> 00:31:27,360 Speaker 1: I can I can rest knowing that things are in 637 00:31:27,360 --> 00:31:29,640 Speaker 1: pretty good shape. UM. So there's not a whole lot 638 00:31:29,680 --> 00:31:32,000 Speaker 1: I will say. When we have rebalances and we're trading 639 00:31:32,480 --> 00:31:34,840 Speaker 1: fifty six billion dollars over the course of a week. 640 00:31:35,520 --> 00:31:37,720 Speaker 1: I think it's uh, there's plenty of days when I'm 641 00:31:37,720 --> 00:31:39,640 Speaker 1: thinking about this is what we need to do the 642 00:31:39,640 --> 00:31:42,840 Speaker 1: next morning, or did we remember to do this? And 643 00:31:42,920 --> 00:31:45,120 Speaker 1: but but fortunately, as I mentioned earlier, we have twenty 644 00:31:45,120 --> 00:31:46,959 Speaker 1: four people who are probably thinking the same thing, and 645 00:31:47,000 --> 00:31:49,920 Speaker 1: we've we've lots of checks and lots of eyeballs that 646 00:31:49,960 --> 00:31:52,640 Speaker 1: are looking at the same reports. And so I think 647 00:31:52,680 --> 00:31:56,160 Speaker 1: over time we can feel relatively comfortable that even though 648 00:31:56,200 --> 00:31:57,960 Speaker 1: it's it's a lot of money that we manage, we 649 00:31:58,040 --> 00:32:00,520 Speaker 1: have we have really good systems in play and lots 650 00:32:00,520 --> 00:32:02,920 Speaker 1: of people who have been through this before. So that 651 00:32:03,000 --> 00:32:05,160 Speaker 1: makes me kind of feel that we can we can 652 00:32:05,200 --> 00:32:08,320 Speaker 1: relax when we get home. So, Jerry, Um, you sort 653 00:32:08,320 --> 00:32:13,320 Speaker 1: of just described the penultimate team sport. I also understand 654 00:32:13,360 --> 00:32:16,320 Speaker 1: that at one point in your past, um, you were 655 00:32:16,400 --> 00:32:18,560 Speaker 1: less of maybe a team sport athlete and more of 656 00:32:18,600 --> 00:32:23,240 Speaker 1: a long distance runner middle distance runner. I think, yeah, yeah, 657 00:32:23,440 --> 00:32:25,960 Speaker 1: so yeah, back in my uh in my college days. 658 00:32:26,400 --> 00:32:29,600 Speaker 1: You know, I grew up in Ireland, but um, I 659 00:32:29,400 --> 00:32:32,520 Speaker 1: I went to Villanova and attract scholarship and uh, you know, 660 00:32:32,640 --> 00:32:35,800 Speaker 1: great great memories of running for Villanova and then even 661 00:32:35,840 --> 00:32:39,440 Speaker 1: after school tried the professional running for a few years 662 00:32:39,480 --> 00:32:42,240 Speaker 1: and competed at the eighty eight Olympics for Ireland. In 663 00:32:43,520 --> 00:32:45,520 Speaker 1: I would say there's a lot lots of lessons that 664 00:32:45,600 --> 00:32:47,640 Speaker 1: you would learn. And it's not just me, and there 665 00:32:47,640 --> 00:32:50,760 Speaker 1: are other guys on the desk cour uh fairly competitive 666 00:32:50,800 --> 00:32:54,040 Speaker 1: in their in their particular sports. Um, but I think 667 00:32:54,120 --> 00:32:56,720 Speaker 1: there are things like you know that you lessons you 668 00:32:56,840 --> 00:32:59,640 Speaker 1: learn from from from me. It was tracked, which were 669 00:33:00,040 --> 00:33:02,800 Speaker 1: you know, hard work, being able to operate in an 670 00:33:02,880 --> 00:33:05,120 Speaker 1: environment where things can change in an instant. You know, 671 00:33:05,160 --> 00:33:08,080 Speaker 1: you start in a race, you think, hey, we're gonna 672 00:33:08,120 --> 00:33:09,680 Speaker 1: go through. We think we're going to go out in 673 00:33:09,680 --> 00:33:12,160 Speaker 1: about fifty eight seconds maybe for the first quarter, and 674 00:33:12,200 --> 00:33:14,600 Speaker 1: all of a sudden someone decides to go out in 675 00:33:14,600 --> 00:33:17,280 Speaker 1: fifty six seconds. Well, all of a sudden, your plan 676 00:33:17,360 --> 00:33:20,200 Speaker 1: has to change. That happens to on the desk where 677 00:33:20,240 --> 00:33:22,440 Speaker 1: you think trading a list and uh, you know, I 678 00:33:22,520 --> 00:33:25,200 Speaker 1: run my five million dollar list, and all of a sudden, 679 00:33:25,320 --> 00:33:27,480 Speaker 1: you know, you get an institution called in and say 680 00:33:27,560 --> 00:33:30,040 Speaker 1: we're bringing in an additional four hundred million today, and 681 00:33:30,080 --> 00:33:32,560 Speaker 1: so you have to change plans. There are things that 682 00:33:32,640 --> 00:33:35,440 Speaker 1: happened late and late late in the day, like three 683 00:33:35,600 --> 00:33:38,400 Speaker 1: fifty five, and you have to be able to change 684 00:33:38,560 --> 00:33:41,800 Speaker 1: and react in an environment where it can be fairly intense. 685 00:33:42,120 --> 00:33:45,200 Speaker 1: And I'm really thankful of what tracted for me in 686 00:33:45,320 --> 00:33:48,120 Speaker 1: terms of being able to operate in that type of 687 00:33:48,160 --> 00:33:50,720 Speaker 1: an environment in my rate. Did you run the mile 688 00:33:50,800 --> 00:33:56,040 Speaker 1: under four minutes one time? Yes? Yeah, that's impressive. Eric. 689 00:33:56,080 --> 00:33:58,760 Speaker 1: But then, um, if I tell you that the world 690 00:33:58,760 --> 00:34:01,320 Speaker 1: record was broken for the five thousand earlier this week 691 00:34:01,440 --> 00:34:05,640 Speaker 1: in Monaco and the uh, the gentleman who did it, 692 00:34:05,640 --> 00:34:09,160 Speaker 1: I forget his name, but he ran three miles, you know, 693 00:34:09,440 --> 00:34:12,520 Speaker 1: three point one miles for five kilometers in twelve thirty five, 694 00:34:12,560 --> 00:34:15,279 Speaker 1: which is almost like three four or one miles back 695 00:34:15,280 --> 00:34:19,319 Speaker 1: to back. So it just puts things in perspective. So 696 00:34:19,480 --> 00:34:21,160 Speaker 1: it's a long way of saying I'm glad I found 697 00:34:21,160 --> 00:34:23,160 Speaker 1: a job away from track because I don't think I 698 00:34:23,160 --> 00:34:26,000 Speaker 1: would have been able to support myself today based on 699 00:34:26,040 --> 00:34:28,000 Speaker 1: the type of times they're running. Yeah, so I have 700 00:34:28,040 --> 00:34:29,560 Speaker 1: to ask how close to a four a minute mile 701 00:34:29,640 --> 00:34:35,960 Speaker 1: can you run? Today? Um? Not even close? Yeah, you know, 702 00:34:36,000 --> 00:34:37,880 Speaker 1: I'm more of a biker these days. Yeah, so I 703 00:34:37,880 --> 00:34:39,560 Speaker 1: get out on the bike. I have a couple of 704 00:34:39,600 --> 00:34:42,760 Speaker 1: friends in the neighborhood. We'll go out and do liket 705 00:34:42,840 --> 00:34:45,640 Speaker 1: mis on on on a Saturday, on a Sunday and 706 00:34:45,640 --> 00:34:47,520 Speaker 1: it's a lot more forgiving on the knees and hips 707 00:34:47,600 --> 00:34:50,000 Speaker 1: and uh yeah, so, uh, the bike has kind of 708 00:34:50,000 --> 00:34:51,959 Speaker 1: taken over from the running. I think all those years 709 00:34:51,960 --> 00:34:54,000 Speaker 1: of running, Uh, the knees took a little bit of 710 00:34:54,040 --> 00:34:56,480 Speaker 1: a pounding and it's the bike is way more forgiving 711 00:34:56,560 --> 00:34:59,680 Speaker 1: right now. Um So, Jerry, my last question for you 712 00:34:59,760 --> 00:35:03,319 Speaker 1: here is you know what you've described. It's it's like 713 00:35:03,400 --> 00:35:06,800 Speaker 1: the one of the most interesting jobs sort of in finance, 714 00:35:06,840 --> 00:35:08,839 Speaker 1: I think where you know the S and P five 715 00:35:08,920 --> 00:35:12,759 Speaker 1: hundred especially, is this penultimate thing that and you guys 716 00:35:12,760 --> 00:35:15,520 Speaker 1: are sort of in the trenches making sure that you 717 00:35:15,560 --> 00:35:19,919 Speaker 1: know the Vanguard Vanguard's name does this thing as as 718 00:35:20,480 --> 00:35:23,480 Speaker 1: as well as anybody in the business. And I'm just curious, 719 00:35:23,800 --> 00:35:26,040 Speaker 1: um on sort of a personal level for you, like 720 00:35:26,080 --> 00:35:28,279 Speaker 1: if you weren't doing this, have you ever given thoughts 721 00:35:28,280 --> 00:35:30,960 Speaker 1: of like what else would you be doing? Well? You know, 722 00:35:31,080 --> 00:35:33,320 Speaker 1: I I do. I'll tell you when I think about 723 00:35:33,320 --> 00:35:35,040 Speaker 1: that is when I when I go back to Ireland 724 00:35:35,080 --> 00:35:38,520 Speaker 1: and I see guys I went to school with and 725 00:35:38,560 --> 00:35:40,959 Speaker 1: they're doing. Believe me, they're they're doing very different things 726 00:35:40,960 --> 00:35:42,640 Speaker 1: than I'm doing today. And I think how different it 727 00:35:42,680 --> 00:35:44,480 Speaker 1: could have been if I never came to the US 728 00:35:44,520 --> 00:35:47,319 Speaker 1: and never never ended up at Villanova. Maybe, you know, 729 00:35:47,360 --> 00:35:49,080 Speaker 1: I don't know what I'd be doing back home, but 730 00:35:49,600 --> 00:35:52,400 Speaker 1: I knew, within i'd say, a month of being on 731 00:35:52,400 --> 00:35:54,440 Speaker 1: the trading desk here at Vanguard, that this is what 732 00:35:54,480 --> 00:35:56,399 Speaker 1: I wanted to do. I mean, I just couldn't wait 733 00:35:56,440 --> 00:35:58,640 Speaker 1: on a Sunday night. I couldn't wait to get into 734 00:35:58,640 --> 00:36:01,560 Speaker 1: work on the Monday morning. And when Friday would hit, 735 00:36:01,680 --> 00:36:03,560 Speaker 1: you know, it was great because we you know, it 736 00:36:03,640 --> 00:36:06,200 Speaker 1: was a couple of days to relax. But Sunday evening, 737 00:36:06,200 --> 00:36:07,880 Speaker 1: I was like, yeah, I can't wait to get back in. 738 00:36:08,000 --> 00:36:09,520 Speaker 1: Here's where we got going on this week. And I 739 00:36:09,560 --> 00:36:11,759 Speaker 1: think most of the people on the desk feel that 740 00:36:11,920 --> 00:36:15,680 Speaker 1: they just have this passion about about trading, that that's 741 00:36:15,719 --> 00:36:17,800 Speaker 1: what they love to do. That's what gets through juices 742 00:36:17,880 --> 00:36:20,160 Speaker 1: going in terms of you know, we look ahead. We 743 00:36:20,239 --> 00:36:22,280 Speaker 1: have a group that kind of picks out corporate actions 744 00:36:22,320 --> 00:36:24,359 Speaker 1: that are happening over the next two weeks. And when 745 00:36:24,360 --> 00:36:27,359 Speaker 1: I assign those trades, different people on the desk, you know, 746 00:36:27,440 --> 00:36:30,160 Speaker 1: you can immediately see people doing the research figuring out 747 00:36:30,719 --> 00:36:33,000 Speaker 1: what's the strategy we want to use to to to 748 00:36:33,200 --> 00:36:36,080 Speaker 1: for this complex corporate action that's coming up. I think 749 00:36:36,120 --> 00:36:38,359 Speaker 1: everyone that we've had very little turnover on the desk, 750 00:36:38,400 --> 00:36:40,160 Speaker 1: So I think when we hire people, we look for 751 00:36:40,200 --> 00:36:43,080 Speaker 1: that passion. And certainly when it comes to funds like 752 00:36:43,160 --> 00:36:45,520 Speaker 1: you know, the five hundred or total stock Market some 753 00:36:45,640 --> 00:36:48,880 Speaker 1: of our kind of flagship uh you know funds um 754 00:36:48,920 --> 00:36:51,920 Speaker 1: there is incredible pride and making sure that those funds 755 00:36:51,960 --> 00:36:56,160 Speaker 1: are performing and delivering the performance that our investors expect. 756 00:36:56,560 --> 00:36:59,239 Speaker 1: And that's what gets us, That's really what satisfies us. 757 00:36:59,280 --> 00:37:01,239 Speaker 1: When we get to talk to some of our shareholders 758 00:37:01,239 --> 00:37:02,840 Speaker 1: at events like when we used to have the Bogo 759 00:37:02,880 --> 00:37:05,120 Speaker 1: Heads meeting, you get to talk to people and they 760 00:37:05,120 --> 00:37:07,560 Speaker 1: tell you, hey, your fund helped put my kids through college, 761 00:37:07,600 --> 00:37:11,719 Speaker 1: you know, helped us acquire a nice home, help me 762 00:37:11,760 --> 00:37:15,000 Speaker 1: retire early. Those are fantastic stories. And really that that's 763 00:37:15,000 --> 00:37:17,880 Speaker 1: what we care about, is is is making sure that 764 00:37:17,920 --> 00:37:20,480 Speaker 1: we're delivering the performance of the funds. And and and 765 00:37:20,520 --> 00:37:22,160 Speaker 1: I think that's I speak for the rest of the 766 00:37:22,160 --> 00:37:24,440 Speaker 1: desk when I say that, all right, I thought of 767 00:37:24,440 --> 00:37:27,120 Speaker 1: one more question. Jerry, and this is this is actually 768 00:37:27,400 --> 00:37:29,280 Speaker 1: truly the last one. And it's when that we often 769 00:37:29,320 --> 00:37:35,160 Speaker 1: ask people, Um, what is your favorite E T F ticker? Oh, 770 00:37:35,160 --> 00:37:36,560 Speaker 1: it has to be v t I. Yeah, I'm a 771 00:37:36,560 --> 00:37:38,520 Speaker 1: bit of a homer when it comes to that. I 772 00:37:38,600 --> 00:37:40,280 Speaker 1: knew you were going to say that, and it can't 773 00:37:40,320 --> 00:37:45,720 Speaker 1: be v t I. It has to be something else. Uh, well, 774 00:37:46,280 --> 00:37:49,000 Speaker 1: you know it's first cousin is VOO. I guess, uh 775 00:37:49,440 --> 00:37:52,960 Speaker 1: you know which is but uh, you know if if 776 00:37:53,080 --> 00:37:56,000 Speaker 1: you know. Obviously people find out sometimes what I do 777 00:37:56,120 --> 00:37:57,640 Speaker 1: and they were like, hey, what should I do? You 778 00:37:57,640 --> 00:37:59,200 Speaker 1: know what I always say, Well, take a look. I'm 779 00:37:59,200 --> 00:38:00,719 Speaker 1: not telling you what to do, but take a look 780 00:38:00,719 --> 00:38:02,920 Speaker 1: at vt I, take a look at VOOR or the funds, 781 00:38:02,960 --> 00:38:05,960 Speaker 1: whatever you decide is best for you. It's a tough 782 00:38:06,080 --> 00:38:08,600 Speaker 1: question for him because Vanguard, I think, only has one 783 00:38:08,600 --> 00:38:12,839 Speaker 1: cool ticker, which is VCR, which is the consumer discretionary. 784 00:38:12,960 --> 00:38:15,920 Speaker 1: And that's accidental. I didn't even mean it. Um, I 785 00:38:15,960 --> 00:38:18,720 Speaker 1: guarantee it. Although Woo you could argue is interesting because 786 00:38:18,719 --> 00:38:23,560 Speaker 1: it's Roman number five, Oh, which is five? Okay, did 787 00:38:23,600 --> 00:38:27,400 Speaker 1: you know that, Jerry? I'm not until you just told me. Okay, 788 00:38:27,440 --> 00:38:29,520 Speaker 1: I think that's why they did it, or again it 789 00:38:29,600 --> 00:38:33,200 Speaker 1: was an accidental situation. But yeah, you guys don't really 790 00:38:33,360 --> 00:38:35,400 Speaker 1: um do much on the ticker front. That's just not 791 00:38:35,480 --> 00:38:38,440 Speaker 1: your game. It's not our game. Yeah, I mean we'd 792 00:38:38,480 --> 00:38:39,840 Speaker 1: like to think. I think when we when we do 793 00:38:39,920 --> 00:38:43,000 Speaker 1: come out with with funds and and ets, you know, Eric, 794 00:38:43,080 --> 00:38:45,359 Speaker 1: that that we're looking for things that are not not 795 00:38:45,440 --> 00:38:48,000 Speaker 1: just a fad, right, it's it's that we think to 796 00:38:48,000 --> 00:38:50,640 Speaker 1: have an investment merit. And yeah, maybe we don't have 797 00:38:50,680 --> 00:38:54,000 Speaker 1: the most creative when it comes to assigning tickers, but 798 00:38:54,640 --> 00:38:58,880 Speaker 1: you know, it's a long game. It's a long game exactly, 799 00:38:59,160 --> 00:39:01,040 Speaker 1: all right, Jerry or Riley, thank you so much for 800 00:39:01,120 --> 00:39:04,000 Speaker 1: spending time with us on Trillians. You're very welcome, guys, 801 00:39:04,040 --> 00:39:10,880 Speaker 1: Thank you very much. Have a great day. Thanks for 802 00:39:10,960 --> 00:39:13,839 Speaker 1: listening to Trillions until next time. You can find us 803 00:39:13,840 --> 00:39:18,160 Speaker 1: on the Bloomberg Terminal, Bloomberg dot com, Apple Podcasts, Spotify, 804 00:39:18,480 --> 00:39:20,680 Speaker 1: and wherever else you like to listen. We'd love to 805 00:39:20,680 --> 00:39:23,719 Speaker 1: hear from you. We're on Twitter, I'm at Joel Weber Show, 806 00:39:24,080 --> 00:39:27,680 Speaker 1: He's at Eric Baltunas, and you can find any at 807 00:39:27,760 --> 00:39:32,680 Speaker 1: Antonia b Massa. This episode of Trillions was produced by 808 00:39:32,719 --> 00:39:36,600 Speaker 1: Magnus Hendricks. Francesca Levy is the head of Bloomberg podcast 809 00:39:37,200 --> 00:39:38,200 Speaker 1: Bye