Speaker 1: Woke no trillions.
Speaker 2: I'm Joel Webber and I'm Eric Belchernas.
Speaker 1: Eric, we have a guest who we've been trying to
Speaker 1: get on the podcast for a while, and she kept
Speaker 1: getting promoted and pushing us off. But finally we have
Speaker 1: her today.
Speaker 2: Yeah, I mean we got her before she's running the
Speaker 2: whole company, which I'm sure will happen one day. But
Speaker 2: this person has come on ETFIQ a few times and
Speaker 2: I bump into her here and there. I saw her
Speaker 2: once at Vanguard. I go to Vanguard like every like
Speaker 2: six months or so for something, and I saw it
Speaker 2: the women in ETF's anniversary event, and just really always
Speaker 2: fun to talk to her. She's I don't know, I
Speaker 2: just find that she sees Vanguard in a unique way.
Speaker 1: Yet she works there and has worked there for a while.
Speaker 2: Yeah, and has worked there for a while, And so
Speaker 2: Vanguard is a little bit of a mystery to a
Speaker 2: lot of people. I mean, we see the flows, Joel,
Speaker 2: this year, they're gonna already, you know, they've taken in
Speaker 2: two hundred and fifty six billion into their ETFs. That's
Speaker 2: more than a billion a day. Only black Rock is close.
Speaker 2: And then the two of them are three times more
Speaker 2: than any other issuer. I mean, it's just ridiculous. The
Speaker 2: fish are jumping in the boat there, and so we
Speaker 2: see the numbers, we see the flows, but they're not
Speaker 2: out and about that much. And so to actually talk
Speaker 2: to somebody there about what's kind of going on inside
Speaker 2: and how it feels to be like looking at all
Speaker 2: this from the inside rather than the outside like us,
Speaker 2: I thought that would be fun.
Speaker 1: We're talking about Jenelle Jackson, who's the head of Bank
Speaker 1: and Institutional Financial Advisor Services. That's a big title. She
Speaker 1: was previously global ahead of ETF Capital Markets. So this
Speaker 1: is a VIP for sure, this time on trillions inside
Speaker 1: Vanguard with Janell Jackson. Jenelle, welcome to the program.
Speaker 3: Thank you for having me. That was quite a build
Speaker 3: up there, guys.
Speaker 1: No pressure, no pressure, no pressure. Oh we're going to
Speaker 1: put that on the shelf. Thank you for joining us.
Speaker 1: Let's just talk about you and your journey through this
Speaker 1: little industry and how you ended up being an ETF
Speaker 1: rain maker.
Speaker 4: All right now, I feel like I might be able
Speaker 4: to live up to the pressure because I feel like
Speaker 4: this is a pretty fun story and I hope everyone
Speaker 4: else not it does as well. Otherwise it's a podcast, right,
Speaker 4: so you can just speed right through it. But I've
Speaker 4: been in the industry for a couple of decades. I
Speaker 4: know it doesn't look that way, or at least I
Speaker 4: hope it doesn't look that way. But I started my
Speaker 4: career working for a bank doing manager research, so I
Speaker 4: was on the other side of the table from where
Speaker 4: my clients are now. I'm now in a sales role
Speaker 4: where my clients are those institutions, and my journey has
Speaker 4: been pretty organic from starting in that manager research type
Speaker 4: of seat. So back then, I was looking at what
Speaker 4: other portfolio managers were doing to run products, determining how
Speaker 4: they would best suit our investors, and whether or not
Speaker 4: we would approve those products for our platform so that
Speaker 4: clients would have access to them. I went to business school.
Speaker 4: I always wanted to be a portfolio manager. I joined Vanguard.
Speaker 4: They've got this really great program for folks who are
Speaker 4: straight out of business school called the NBA Leadership Development Program.
Speaker 4: So I went through three rotations pretty rapidly over an
Speaker 4: eighteen month period. So that's three of my Vanguard jobs
Speaker 4: that I've had in the past twelve years. One was
Speaker 4: again on the due diligent side of things, but this
Speaker 4: time seeing that through the Vanguard lens. The other was
Speaker 4: working with our institutional clients and then one back in research.
Speaker 4: So I launched into our institutional advice group after that.
Speaker 4: So it's bringing together that research background, getting closer to
Speaker 4: clients and Eric will love this. But I was in
Speaker 4: that role for about five months when a post went
Speaker 4: up internally for a chief of staff to the Chief
Speaker 4: Investment Officer, and so I applied for that role. At
Speaker 4: the time, our CIO was Tim Buckley, who's our former CEO.
Speaker 4: So I got to work for Tim as his chief
Speaker 4: of staff for three years, which is pretty long for
Speaker 4: a chief of staff. It's usually like an eighteen to
Speaker 4: twenty four month thing. And I say it's because Tim
Speaker 4: enjoyed working with me so much, and he says it's
Speaker 4: because I needed that much development. So the truth is
Speaker 4: probably somewhere in the middle. Subsequent to that role, I
Speaker 4: went to our Australia office to run funds. So my
Speaker 4: whole career I had done research on running funds, talking
Speaker 4: to clients about funds, and then I got my own
Speaker 4: chance to touch the money. So I was in our
Speaker 4: quantitative equity group running factor multi asset and alpha products,
Speaker 4: at which point I came back to the US after
Speaker 4: a couple of years running our ETF Capital Markets team.
Speaker 3: That's when I first met Eric.
Speaker 4: A couple years in that role, and then I moved
Speaker 4: to lead our global ETF Capital Markets team, which includes
Speaker 4: our broker relationships and our index relationships, and then transitioned
Speaker 4: into the role that I am in today a few
Speaker 4: months ago. So it's kind of been like two years,
Speaker 4: two years, two years, two years. But I think it's
Speaker 4: just been a really organic process in how we develop
Speaker 4: people at Vanguard.
Speaker 1: So let me get this straight. You were in Malvern
Speaker 1: and they sent you to Australia and then you came
Speaker 1: back to Malvern.
Speaker 3: Malvern, Melvin to Malvern.
Speaker 1: Yeah, you couldn't have You could have been doing this
Speaker 1: in Australia.
Speaker 3: Maybe I'll go back some day.
Speaker 2: Okay, Vanger is pretty big, it's in the country.
Speaker 1: Yeah, I'm just saying that seems like a big dream
Speaker 1: job and a dream location. So so talk to us
Speaker 1: about Malvern. What's it what's it feel like there? Eric
Speaker 1: and I have been, but what's it feel like for
Speaker 1: for somebody who's been with the company for so long?
Speaker 4: Man Malvern feels like the core of our culture. You know,
Speaker 4: we talk about our mission and we talk about putting
Speaker 4: clients first, and I think every organization says, hey, what
Speaker 4: sets us apart is our people and our mission. But
Speaker 4: when you get here, you really feel it. It almost
Speaker 4: feels like a college campus to me, and we all
Speaker 4: go to the same school and we're all, you know,
Speaker 4: cheering for the same team. And when you get to campus,
Speaker 4: you just feel that. And the funny thing is when
Speaker 4: you go to our offices anywhere they are in the world,
Speaker 4: it feels the exact same way. People are here to
Speaker 4: help each other, we're here to help our clients. It
Speaker 4: attracts a certain type of person to work here because
Speaker 4: of the mission. So I really think it's a happy place.
Speaker 4: There's a lot of people here working really hard, but
Speaker 4: at the end of the day, I think we're all
Speaker 4: very focused on helping investors reach their goal. So how
Speaker 4: does somebody get to retirement and feel comfortable. How do
Speaker 4: people think about their goals and saving for their children's education?
Speaker 4: You know, those are the things that make me skip
Speaker 4: out to my car at the end of the day
Speaker 4: feeling like I'm a part of that.
Speaker 1: Yeah, you know.
Speaker 2: And by the way, you know, Malvern is right next
Speaker 2: door to Valley Forge, which was the original office. You know,
Speaker 2: Bogel loved that. I think he even kept Valley Forge
Speaker 2: as a po box for a while so they can
Speaker 2: say they're in Valley Forge because of that's where the
Speaker 2: US Revolutionary Army was on, like really in their last legs,
Speaker 2: like they were probably about to just rough winter. Yeah,
Speaker 2: and that's where they kind of rose up in Bogel.
Speaker 2: He loved that, man, he was so into that. But
Speaker 2: I also think, like you're walking around this campus. I've
Speaker 2: been there. It is like a campus. There's people walking around. Now,
Speaker 2: the fish jump in the boat. There's flows coming in
Speaker 2: every day. Is I mean, I guess is that does
Speaker 2: the mood just is it just a great mood because
Speaker 2: there's always inflows.
Speaker 1: I mean, I it does seem like it's a pretty
Speaker 1: happy like you.
Speaker 2: Never see off flows, Joel. They have never seen. They
Speaker 2: don't even know what it's like. In two thousand and eight,
Speaker 2: they took in money every month.
Speaker 4: The thing of here is, you know, it's it's a
Speaker 4: very humble culture. We think about it in the way
Speaker 4: that like, hey, this isn't our money. We're stewards of
Speaker 4: this capital for others, we're owned by our shareholders, so
Speaker 4: we're coming in. We're working hard every day to make
Speaker 4: sure that we're doing the right things for clients. So yeah,
Speaker 4: I hope everybody is happy, But we definitely don't take
Speaker 4: that success for granted. We're always being thoughtful about the future,
Speaker 4: about opportunities for growth, and about the best ways that we.
Speaker 3: Can serve our clients.
Speaker 4: But if I could take a second to go back
Speaker 4: to like how I think about my career, because I
Speaker 4: know some people are probably like, WHOA, she's just skipping
Speaker 4: around the place. But I think about this way of
Speaker 4: developing expertise akin to like the hospitality industry. So when
Speaker 4: I describe it to people, it's like, hey, I started
Speaker 4: my career doing research, which is akin to thinking through recipes,
Speaker 4: like working in a restaurant. So I'm helping somebody come
Speaker 4: up with the menu. Then you know, as a portfolio manager,
Speaker 4: I move into the kitchen and now I'm starting to
Speaker 4: cook up the things.
Speaker 3: Now moving into sales.
Speaker 4: All right, I'm like the may or d at the
Speaker 4: front of the house, and my team is bringing out
Speaker 4: the meals to clients, our patrons and hoping that they're
Speaker 4: happy with that we're offering it to them at a
Speaker 4: low cost. But the tricky thing now is that, you know,
Speaker 4: we sit on a street of restaurants and a lot
Speaker 4: of other restaurants are cooking up the same things we are,
Speaker 4: and some of those restaurants, Eric, are putting hot sauce
Speaker 4: on their meals. And so how do we keep clients
Speaker 4: coming back to us by making sure we have what
Speaker 4: they want that fits into, you know, a way that
Speaker 4: we think about the ingredients that we're experts and delivering.
Speaker 4: And so I just view my career as it's very
Speaker 4: organic and I feel like all of those opportunities that
Speaker 4: I've had to touch and lead different teams have helped
Speaker 4: me be successful over time and in the role that
Speaker 4: I'm in today.
Speaker 1: We do talk about hot sauce a lot. And tip
Speaker 1: to Eric, what is the spiciest offering in Vanguard's portfolio?
Speaker 4: Do you think, hmmm, spiciest offering in our portfolio? So
Speaker 4: I'm probably going I feel like this is the leading question.
Speaker 1: No, it's just a question, just a question.
Speaker 3: The things that we.
Speaker 4: Think of are spicy, Like we still serve up with
Speaker 4: a glass of milk. So if you think about something
Speaker 4: like high old bonds, you know, and actively managed high
Speaker 4: old bond fund.
Speaker 3: We're gonna have a quality.
Speaker 4: Tilt on a product like that, so it's not gonna
Speaker 4: be the junkiest of the junk, but I'll still get
Speaker 4: you the exposure that you want in a safer way.
Speaker 4: So that's your hot sauce with a cup of milk.
Speaker 2: I have a story about this real quick. So I
Speaker 2: wrote a note once. When you work at the quantitative group,
Speaker 2: you guys put out these factorytfs about like eight nine
Speaker 2: years ago, and they equal weighted, which jacks up the vall.
Speaker 2: And so this was the most volatile thing Vanguard ever
Speaker 2: put out. It was actively managed volatile factor stuff. At
Speaker 2: the time, everybody was putting stuff like this out. And
Speaker 2: I wrote a note that said, Vanguard serves up the
Speaker 2: hot sauce, but hold the bogel something like that. He
Speaker 2: used that in one of his books. He goes, Bloomberg
Speaker 2: knew how I felt about it. And so even something
Speaker 2: like that, it was like an equal weighted quality atf
Speaker 2: You know, there's the DNA of like s and P
Speaker 2: five hundred beta total market and then Vanguard. I feel
Speaker 2: like this is just my opinion. I'd like to get
Speaker 2: your take on it. You do kind of push the
Speaker 2: edges a little, you know, there's the Boglian DNA. Then
Speaker 2: there are places private equity China. There are definitely places
Speaker 2: that I think Vanguard goes that pushed the envelope a bit,
Speaker 2: but not anywhere near the way other issuers are pushing
Speaker 2: the envelope into the more hot sauce areas. Do you
Speaker 2: notice that, like, is there a constant push against the
Speaker 2: edges to see how far you guys can go?
Speaker 4: You know, I would say that what our product lineup
Speaker 4: has evolved to be over time has just been aligned.
Speaker 3: To the evolution of markets.
Speaker 4: So we've had the same approach to product philosophy for
Speaker 4: our entire history, and we really focus on four things
Speaker 4: when it comes to product development. And I get questions
Speaker 4: all the time, like when is Vanguard going to launch
Speaker 4: an XYZ fund? And you know, I always take people
Speaker 4: back to our product philosophy around how we develop products.
Speaker 3: So is there enduring investment merit?
Speaker 4: And this is usually the one where people get hung
Speaker 4: up the most, like is this something that's been rooted
Speaker 4: in academics that it makes sense for a client's portfolio?
Speaker 4: You know, does it fill a long term need for
Speaker 4: a target client? Like that's number two, So enduring investment merit,
Speaker 4: long term investment need, So not any kind of tactical,
Speaker 4: trendy cool things that are happening right now, but things
Speaker 4: that will be enduring over time. You know, can we
Speaker 4: deliver this solution at a competitive advantage? Sometimes we're the
Speaker 4: best at things and that's where we like to produce
Speaker 4: products and where we can't do it or where we
Speaker 4: feel like it's a stretch for us from you know,
Speaker 4: how we think about portfolio management. We're not going to
Speaker 4: go there. And is it feasible to launch the product?
Speaker 4: So this is the boring stuff like regulatory operational hiccups,
Speaker 4: But it really always goes back to that first line.
Speaker 4: The first two really is there enduring investment merit around this?
Speaker 4: Has the research been done? Doesn't make sense? And number two,
Speaker 4: is it going to be something that is a solution
Speaker 4: that's going to have long term investment merit.
Speaker 3: That's how we think about solutions for our client base.
Speaker 4: Yeah, it's resulted in us, like you know, keeping a
Speaker 4: rake in the closet and the cash is just coming
Speaker 4: in and we rake it up.
Speaker 3: That's kind of how it's been, and we like that.
Speaker 2: When we bumped into each other in the one of
Speaker 2: the ship offices, I don't know name a ship type.
Speaker 2: It was in one of those what office does you
Speaker 2: work in capital markets? What was the name of the building?
Speaker 3: Victory?
Speaker 2: Victory. Yeah, so all the buildings are new after ships.
Speaker 2: That's another thing Bogel named is the whole company is
Speaker 2: named after a British worship that took down Napoleon. Anyway,
Speaker 2: if we look at this stuff, you sort of teased
Speaker 2: a little bit about this sort of trendy one thing
Speaker 2: that I've noticed as I've sort of become somewhat fluent
Speaker 2: in bitcoin. I spent the last year on Planet Bitcoin.
Speaker 2: I think I'm pretty knowledgeable now when we look at
Speaker 2: the growth of bitcoin, these ETFs have blown up, like
Speaker 2: ibid is now forty billion dollars. It's the top one
Speaker 2: percent of all ETFs. People will reply, it's like not
Speaker 2: enough for them to have like all this money, all
Speaker 2: time highs they get. They're still bothered by you. They're like, Vanguard,
Speaker 2: what's their problem? Why won't they bend the knee? There's
Speaker 2: a meme going around that has your ship logo, And
Speaker 2: then instead of Vanguard. It says, MGM, I not gonna
Speaker 2: make it, and the ship's like and the ship's breaking
Speaker 2: in half. Anyway, that's that's just do you think about
Speaker 2: this at all?
Speaker 3: Do you care?
Speaker 2: Is there any temptational I know Salim has basically kind
Speaker 2: of shot down that's the new CEO.
Speaker 1: But that's Slim Ramsey who was on a trillion yeah,
Speaker 1: when he was at Blackrock before he made the transition.
Speaker 2: But what does all that look like from afar? Or
Speaker 2: are you just insulated from all that noise?
Speaker 4: You know what, It's a funny meme. I appreciate the
Speaker 4: feedback around products, so you know, hopefully there aren't too
Speaker 4: many more people jumping into my LinkedIn chats because of this,
Speaker 4: Like that does happen a lot. But yeah, I think
Speaker 4: we've talked about why we haven't entered that product space.
Speaker 4: But what I do think has been really cool is
Speaker 4: like you still see the vanguard effect there right, Like
Speaker 4: you kind of see these competitors that have fallen all
Speaker 4: over themselves to have the lowest cost product. And I
Speaker 4: think that even where we don't have a product, you
Speaker 4: can feel the vanguard influence. And so for clients who
Speaker 4: do want to, you know, leverage those types of products.
Speaker 3: They're there.
Speaker 4: I think there's plenty of competition. It looks like it's
Speaker 4: been a healthy year for those products. So yeah, I
Speaker 4: feel like we've done our job, even though we might
Speaker 4: not be directly, we've influenced what that looks like.
Speaker 2: So basically, crypto Twitter, you're welcome. I like that. That's
Speaker 2: pretty good way to pivot from that to that.
Speaker 3: I did not say that.
Speaker 1: I think she was pretty clear about it.
Speaker 2: Well, I saw I just sometimes I said LinkedIn you're welcome.
Speaker 1: So you did hit on something there though. Seleem Ramji
Speaker 1: new CEO, and since you have interacted with previous CEOs,
Speaker 1: I'm curious previous CEOs at Van Gerd, I'm curious, how
Speaker 1: do you think he's going to make his mark and
Speaker 1: what's what's what's the plan?
Speaker 4: Yeah, I think everybody's really excited that Seleema is here.
Speaker 4: He brings a host of knowledge to this organization. I
Speaker 4: will say, oh, I hope he doesn't fire me for this.
Speaker 4: But I think when he got here, we were all like,
Speaker 4: oh my goodness, there's a black, red guy here and
Speaker 4: you know he's running the ship.
Speaker 3: But he's very thoughtful he's very warm.
Speaker 4: I really like that, Like as a person, he's very warm.
Speaker 4: I think he has kind of looked at what's going
Speaker 4: on in the house and is thinking about his long
Speaker 4: term strategy. And what I'm most interested in is, you know,
Speaker 4: are we going to be more aggressive when it comes
Speaker 4: to product launches. You know, we've been pretty conservative, maybe
Speaker 4: a product or two here or there. I think there's
Speaker 4: some opportunities for us to think about, you know, what
Speaker 4: we can do, especially as it relates to active and
Speaker 4: ETFs and fixed income and ETFs, and I think those
Speaker 4: are areas of expertise that he brings to the top
Speaker 4: of the house. And so for me, I'm pretty excited
Speaker 4: about how he's thinking about the organization. We'll see what
Speaker 4: other impacts that he has beyond product, but I think
Speaker 4: that's the most exciting thing for me, especially as I'm
Speaker 4: getting closer to clients and they ask us questions like, Hey,
Speaker 4: why don't you have again X y Z product? And
Speaker 4: you know, as long as again it's lined to our
Speaker 4: investment philosophy, maybe we'll see some more products to come,
Speaker 4: as we have with you know, our recent active fixed
Speaker 4: income ETF launches and some of the work that we're
Speaker 4: doing with active muni eat.
Speaker 1: Yeah.
Speaker 2: So what we've noticed is that a lot of the
Speaker 2: recent products have been active actives having a bit of
Speaker 2: a renaissance in ETFs. It's not totally what it looks like.
Speaker 2: I think if you remove the buffers and some of
Speaker 2: the kind of we'll call it alternative active. You know,
Speaker 2: bond pickers, thought pickers definitely doing better than they used to.
Speaker 2: And I think it makes sense moving into active. I
Speaker 2: guess when when you're thinking about these products and active,
Speaker 2: Vanguard isn't really known for that. I think, you know,
Speaker 2: they're known for passive. And do you have to like
Speaker 2: educate them that you have active too, or do they
Speaker 2: they mostly know because they remember the mutual funds, because
Speaker 2: it does seem like, you know, Vanguard kind of basically
Speaker 2: got everybody to believe that active didn't add a lot
Speaker 2: of value. I mean, that was what again, I'll go
Speaker 2: back to Bogel. He spent many years doing that. Yet
Speaker 2: at the same time, your active funds grew to I
Speaker 2: don't know, one to two trillion dollars. I think you
Speaker 2: have an assets and active. How's that tension between you know,
Speaker 2: you're going to get these active ETFs out there, there's
Speaker 2: definitely a market for it, but you're also known for passive,
Speaker 2: so you're trying to sell like B and D, but
Speaker 2: also the ETFs trying to beat B and D.
Speaker 4: Yeah, I mean, I think this is like a myth
Speaker 4: that I'm constantly dispelling. So yeah, we're we're an index
Speaker 4: powerhouse and an indexing pioneer. But you know, when you
Speaker 4: look back at the history of Vanguard and next year
Speaker 4: we'll be celebrating fifty years when the organization first started,
Speaker 4: all we offered was actively managed funds, so we're really
Speaker 4: rooted in active, and I think we've also had to
Speaker 4: dispel this myth around active versus passive, Like there's always
Speaker 4: been a role for both in a portfolio, but low
Speaker 4: cost has always been the Vanguard story. So even if
Speaker 4: you are going to active, be thoughtful about, you know,
Speaker 4: knowing what you own. You'll hear this a lot when
Speaker 4: you come to Vanguard next Eric that we're true to label,
Speaker 4: Like that's the new thing we say everywhere we go.
Speaker 3: Trutally, they just look at what the title of a
Speaker 3: fund is.
Speaker 4: Yeah, you have to look through the product, at the
Speaker 4: characteristics so that you know what you're getting instead of
Speaker 4: just what that headline is.
Speaker 3: So when you look at a.
Speaker 4: Fun name for a Vanguard product, when you look through
Speaker 4: with those characteristics, you'll find that we're true to label.
Speaker 2: So fifty years, what are you guys gonna do? Are
Speaker 2: you gonna throw a big party? Or I could see.
Speaker 1: Vanguard inviting himself before we even know Vanguard.
Speaker 2: Knowing Vanguard, they're gonna have everyone bring in their own dish,
Speaker 2: you know what I mean? Because they're gonna spend like
Speaker 2: a very little money on it, because there is no
Speaker 2: money all the investors have byob.
Speaker 3: Hey, look, we want to be doing our jobs.
Speaker 4: If we had a big monster party for our fifty year,
Speaker 4: I don't know. Maybe we'll find some way to give
Speaker 4: something back to shareholders to celebrate fifty years there that
Speaker 4: would be pretty.
Speaker 2: That would be on brandow that'd be true to label,
Speaker 2: true to label, boring but effective.
Speaker 3: You're working your way off the invitees last year. I
Speaker 3: don't know about that.
Speaker 1: All remain neutral throughout this, so keeping.
Speaker 3: Keep me in the send the invite here. Wait, you
Speaker 3: got it?
Speaker 1: Okay, So just on this active question though, because it
Speaker 1: does speak to sort of where the market is going
Speaker 1: and has gone, and you could put the bitcoin conversation,
Speaker 1: you could put the hot sauce conversation, and as elements
Speaker 1: of this, and yet there's this thing that is like
Speaker 1: you know to you know your true to label comment.
Speaker 1: How do you guys just look at innovation right, Like
Speaker 1: there's a lot of things that the market's going to do.
Speaker 1: When do you feel like you have to chase what
Speaker 1: the market's doing versus just like, we do what we
Speaker 1: do and we'll take our time and you know, assess
Speaker 1: our options accordingly.
Speaker 4: Yeah, I think going back to the product philosophy, like
Speaker 4: we stay pretty disciplined around that, but I wouldn't say
Speaker 4: that we tuck our heads in the sand either, Like
Speaker 4: we're very conscious about how markets are evolving around us.
Speaker 4: We pay attention to all the products that are launched.
Speaker 4: We do a ton of research on products. That doesn't
Speaker 4: mean we always launch them or we're always aware of
Speaker 4: what's happening in the industry. So we might not launch
Speaker 4: the trendy products, but we know what they are. We
Speaker 4: know what our investor base wants and what they expect
Speaker 4: from us, and it's a two way street. So we
Speaker 4: try to meet clients where they are, but also in
Speaker 4: a way that's holistic to our philosophy and who we are.
Speaker 1: Okay, Can I ask if you have product envy about
Speaker 1: anything that's in the marketplace that you wish you had
Speaker 1: in your portfolio? What would that be?
Speaker 4: You guys are trying to get me in trouble, aren't you.
Speaker 4: I think there are a lot of cool things that
Speaker 4: are happening with alternative assets and bringing those things to
Speaker 4: the etf rapper. I don't know that those things are
Speaker 4: going to be successful, yeah, but that's definitely something that
Speaker 4: I'm keeping an eye on, you know, be it private
Speaker 4: equity or private credit. How are people thinking about structuring
Speaker 4: that into such a liquid instrument. I don't quite understand
Speaker 4: how that's gonna work yet, but if it does, I
Speaker 4: think that will be really neat to bring that downstream
Speaker 4: more to retail investors.
Speaker 1: I'm with you.
Speaker 2: This after digital assets. To me, this is the next
Speaker 2: new frontier State Street them an apollo. I hooked up Vanguard.
Speaker 2: I know you have an advisory service, and the advisory
Speaker 2: service I believe you have a relationship with a private
Speaker 2: equity firm to get some of your advisor clients that access.
Speaker 2: But that's different than packaging it into a liquid ETF.
Speaker 2: But that certainly is going to be something that I
Speaker 2: think is interesting down the road. I guess I was
Speaker 2: just also curious, like we all know Vanguard. It's like
Speaker 2: legendary company inside the bubble, but like out there in
Speaker 2: Malvern when you're like operating your regular life, do people
Speaker 2: know Vanguard? What's their reaction? Are they like a hometown
Speaker 2: hero in Malvern? Like, I'm just curious how how you
Speaker 2: how people respond that You're like, hey, I'm I'm pretty
Speaker 2: senior person at Vanguard. What do they say?
Speaker 4: You know, I'll take this back to Australia when you know,
Speaker 4: I would be out and people would ask me what
Speaker 4: I do and I would tell them where I worked
Speaker 4: and they're like, what's that? What's Vanguard? And then I
Speaker 4: would tell them and they were like, oh shares, Like oh,
Speaker 4: you sell shares.
Speaker 3: Share.
Speaker 4: I can go to restate in the US, and once
Speaker 4: I say that I work here, people will either say
Speaker 4: thank you, or I'm a client, or you know, I
Speaker 4: appreciate the work that you do.
Speaker 3: Like I don't think there's.
Speaker 4: A lot of celebrities around here. I don't think you'll
Speaker 4: see somebody's face and recognize us. But we're here We're
Speaker 4: doing the work for our clients, and it's so great
Speaker 4: just to be walking in an airport somewhere and you know,
Speaker 4: you chat with somebody and they ask you what you do,
Speaker 4: and you tell them that you work here, and just
Speaker 4: to hear the appreciation in their voice and the thanks
Speaker 4: in their voice. Again, like, that's something that makes me
Speaker 4: so happy that I work here. You know, I could
Speaker 4: do this work at other organizations, but I really feel
Speaker 4: like our clients respect and value what we do every day,
Speaker 4: and in return, you know, I'm giving them the most
Speaker 4: that I have each and every day that I come here.
Speaker 2: And I've obviously covered you guys a ton And the
Speaker 2: key ingredient for Vanguard to me isn't the index fun
Speaker 2: It's the mutual ownership structure. But when you say those
Speaker 2: three words, people's like eyes glaze over. You almost lost
Speaker 2: them just by saying the word mutual ownership structure. But
Speaker 2: it is the most powerful thing that has ever happened
Speaker 2: in the financial services industry in the last fifty years.
Speaker 2: It's like, when I go to see clients, I'm like,
Speaker 2: Vanguard is like the Big Bang, Like everybody has to
Speaker 2: now orbit around the fact that they made Beta free.
Speaker 2: But they didn't just make it free. It was a
Speaker 2: mutually owned company that slowly voted down to lower the
Speaker 2: fee year after year. How do you explain that unique
Speaker 2: structure that no one else has when you meet somebody
Speaker 2: who's maybe not in the industry.
Speaker 4: Well, I mean, first of all, it sounds like you've
Speaker 4: been working in the back of the kitchen as well,
Speaker 4: so I think you know the end to end spectrum
Speaker 4: of all things Vanguard. You probably have a better answer
Speaker 4: for this one than I do. But you know, I
Speaker 4: would say that a lot of times people look at
Speaker 4: us and say we're boring, but we've been innovative, and
Speaker 4: I think this is one of those cases where you
Speaker 4: can see us having an innovative product structure that's provided
Speaker 4: our clients with enduring lif low cost investment vehicles for
Speaker 4: over two decades now, and we're confident that will be
Speaker 4: the case going forward. So we're happy that we've brought
Speaker 4: a tool to our clients that's been able to add value.
Speaker 2: And when we talk about structures, obviously Bogel loved his TIFFs.
Speaker 2: This was traditional index fund, which was mutual funds, and
Speaker 2: you guys have a ton of assets in those Obviously,
Speaker 2: you have like seventy percent market share at index mutual funds,
Speaker 2: but with ETFs they seem like the future of Vanguard.
Speaker 2: Whenever you look at percent flows versus percent assets, ETFs
Speaker 2: punch above their weight every year. Are you guys really
Speaker 2: looking at this structure to be your future?
Speaker 3: A and B.
Speaker 2: Do you see any other structures that could challenge them,
Speaker 2: like direct indexing or tokenization which I can't help but
Speaker 2: editorialize I don't see either of those messing with the
Speaker 2: ETF for at least the decade DII in particular. But like,
Speaker 2: what's your take on the structures out there and like
Speaker 2: your future?
Speaker 4: Well, first of all, I didn't know we were allowed to
Speaker 4: say MF on this podcast, but okay, we can talk
Speaker 4: mutual funds if you want to. I think that you know,
Speaker 4: it's all about investor preference for us, So yeah, we
Speaker 4: started with mutual funds. We built out our ETF business.
Speaker 4: Where I am in financial advisor services, you see a
Speaker 4: lot of preference for the ETF vehicle. You know where
Speaker 4: my counterparts are probably in our institutional business working with
Speaker 4: defined contribution plans, they probably still have a preference for MF,
Speaker 4: So I think they're still room for both. Where we've
Speaker 4: seen a lot more growth, for sure, has been on
Speaker 4: the ETF side of the house. Tokenization, I think is interesting.
Speaker 4: I think there's a lot of opportunity for operational efficiency
Speaker 4: for products regardless of the structure. So I think there's
Speaker 4: more to come there. But I don't know if it's
Speaker 4: going to revolutionize like product structure, if it's going to
Speaker 4: be more of an operational enhancement direct indexing, you know,
Speaker 4: we have an offer there. I think this is a
Speaker 4: unique solution for again, certain types of clients who may
Speaker 4: want to customize what their investments are. Who are you know,
Speaker 4: in a a bracket where they are being very thoughtful
Speaker 4: continuously about tax list harvesting, or they just want more
Speaker 4: insight and control over what securities that they own in
Speaker 4: a way that's structured and thoughtful. So I think there's
Speaker 4: a room for direct indexing. I don't know, if you know,
Speaker 4: when these solutions started coming out, they were like, Hey,
Speaker 4: this is the fun killer, this is the ETF killer.
Speaker 4: I don't know if we'll get to that point, but
Speaker 4: I think it's an interesting solution for a certain type
Speaker 4: of client.
Speaker 1: As long as we're talking about Bogel a little bit
Speaker 1: you were at Vanguard while he was there, Eric and
Speaker 1: I came out and visited him once. Eric has written
Speaker 1: a book about him. Curious, what's your favorite memory of
Speaker 1: Jack Bogel oh Man.
Speaker 4: I really loved first when I first started working here,
Speaker 4: which was twelve years ago, and I read all the
Speaker 4: Bogel books before I got here, and I knew he
Speaker 4: had an office on campus. But it's like it's like
Speaker 4: working with Beyonce in your office. So it's kind of
Speaker 4: like people would get so exciting when there would be
Speaker 4: a Bogel sighting. But the funny thing was he pretty
Speaker 4: much walked to the galley, which nautical theme is what
Speaker 4: we call our cafeteria. He walked to the galley every day,
Speaker 4: and he was so humble and would engage in conversation
Speaker 4: with anyone. He was never too busy, He was never
Speaker 4: too much of a rush to get his galley salader.
Speaker 4: I think Gally Peanut butter and jelly was his favorite.
Speaker 3: But just this, Yeah, you guys have PBNJA with him.
Speaker 4: Super humble, thoughtful person who was always accessible to crewe,
Speaker 4: which is what we call ourselves nautical term, and that
Speaker 4: is what I respected the most. Again, just bringing that
Speaker 4: like client centric culture and seeing it at the top
Speaker 4: of the organization is what really made that cascade down
Speaker 4: to the rest of us.
Speaker 1: Yeah. Cool. I want to ask another question, because you
Speaker 1: know four A one case that's a place where Vanguard
Speaker 1: does a ton of business and especially in that m
Speaker 1: F world. What's it? What's it like? What's the Vanguard
Speaker 1: four A one K program look like JENNE for employees?
Speaker 1: Like just Vanguard top to bottom?
Speaker 3: Yeah, yes, of course.
Speaker 4: So we bring our low cost solutions to our employees,
Speaker 4: and I think that's important because if we're cooking it up,
Speaker 4: like we should probably eat our own cooking. I think
Speaker 4: we also, you know, from a regulatory standpoint, want to
Speaker 4: make sure that just like any other plan sponsor, we
Speaker 4: offer the best solutions to our employees, and we are
Speaker 4: thoughtful about like the manager search process and making sure
Speaker 4: that we have a lean lineup for our investors to use.
Speaker 4: I'd say we treat ourselves just like any other client,
Speaker 4: like we want to have the best products there for
Speaker 4: our crew to leverage, as they say, for their retirement
Speaker 4: goals as well. We also have really great benefits around
Speaker 4: our retirement savings plans.
Speaker 3: So if anybody is looking for a job.
Speaker 1: I hope the match is amazing.
Speaker 3: It's impressive, well impressive.
Speaker 2: When Vocals started this out, there was early in the
Speaker 2: early days, people were like, yeah, yeah, we're saving all
Speaker 2: these investors' money, but you know, we want to get
Speaker 2: a little something too, And so he created some programs
Speaker 2: internally that to help solve that because there is like, hey,
Speaker 2: we're doing God's work here, but you know, people go
Speaker 2: to business school, they want to make money too. There
Speaker 2: was always a little bit of a tension there, which
Speaker 2: I can understand. Speaking of that, I do think if
Speaker 2: Vanguard does have an achilles heel, it's customer service, and
Speaker 2: I was curious. I know that's a little out of
Speaker 2: your purview, but like, is that one of the focuses
Speaker 2: coming up or what can we can we expect to
Speaker 2: see a lot of resources put towards that in the future.
Speaker 3: The answer to that is absolutely. I think.
Speaker 4: There was an interesting article that came out on Salim's
Speaker 4: first day around our client experience, and you know, we've
Speaker 4: really been investing heavily in that space.
Speaker 3: We listen to our clients, we hear the feedback. We're
Speaker 3: trying to leverage.
Speaker 4: Lots of data that we have in our hands and
Speaker 4: lots of emerging technologies so that we can ahead of
Speaker 4: the game. We're not just trying to catch up when
Speaker 4: it comes to client experience. I think we all admit
Speaker 4: that we've fallen behind, but we've been working through technology
Speaker 4: modernization and I'd say we're most of the way there,
Speaker 4: and now it's the how do we kind of gain
Speaker 4: our footing back so that we're leaders in the industry
Speaker 4: when it comes to client experience. So that is definitely
Speaker 4: something that we're focused on. That's something that we are
Speaker 4: putting the right amount of resources towards, and something that
Speaker 4: in the coming years when I come here and chat
Speaker 4: with you guys on this podcast, hopefully we won't have
Speaker 4: to talk about because you'll be that impressed.
Speaker 3: I'm in sales now, I can tell.
Speaker 1: I can tell. All right. So last question one that
Speaker 1: we often ask folks, all this is going to be
Speaker 1: good favorite ETF ticker other than your own? So nothing
Speaker 1: that Vanguard does. What's your favorite ETF.
Speaker 3: Ticker other than my own?
Speaker 2: You can take some time, no rush.
Speaker 3: I mean, I'm just gonna be silent until we run
Speaker 3: out of time on this podcast.
Speaker 1: First time I think that's ever been the response just
Speaker 1: let the shot cloud go.
Speaker 4: I think we have the most clever tippers when it
Speaker 4: comes to using romannumerals, So woo is my favorite.
Speaker 3: It's five hundred.
Speaker 2: Look, you guys have a lot going on, But could
Speaker 2: you tell is not one of them?
Speaker 1: Could you tell that she works in sales? That was
Speaker 1: I wouldn't own.
Speaker 2: I wouldn't claim that.
Speaker 1: Yeah, who is kind of cool.
Speaker 2: It's five hundred Roman numeral, but I mean that's we're
Speaker 2: going to get you a shirt.
Speaker 1: And chill.
Speaker 2: My my friend who's a heart doctor from college, that's
Speaker 2: his phrase. I saw him at the fiftieth birthday party, is.
Speaker 1: Like woo and chill Man, Woo and chill. Anyway, on
Speaker 1: the merch, Janelle Jackson, thanks so much for joining us
Speaker 1: on Trillions.
Speaker 3: Thank you for finally having me.
Speaker 1: Thanks for listening to Trillions until next time. You can
Speaker 1: find us on the Bloomberg Terminal, Bloomberg dot com, Apple Podcasts, Spotify,
Speaker 1: or wherever else you'd like to listen. We'd love to
Speaker 1: hear from you. We're on Twitter. I'm at Joel Webber Show.
Speaker 1: He's at Eric Baltunas. This episode of Trillions was produced
Speaker 1: by Magnus Hendrickson. Bye