Wellington Management, every mention

Vanguard: The communist capitalist who saved investors a trillion dollars (Audio) · Acquired May 18, 2026 · 66 mentions

• ▶ 27:45 David Rosenthal Open-ended public investment company in Philadelphia called Wellington Management.
• ▶ 28:06 David Rosenthal Now Wellington and its Wellington fund
• ▶ 29:11 David Rosenthal Like, I think Morgan and everybody at Wellington and Jack absolutely did have their customers and the fund holders in mind and wanted to do a great job for them.
• ▶ 29:39 David Rosenthal So Jack takes to Wellington and to Mr.
• ▶ 29:48 David Rosenthal Basically doing, like, every job in the company, and after a pretty short number of years, he emerges as the clear heir apparent to take over Wellington when Morgan retires.
• ▶ 30:30 Ben Gilbert And importantly, a successful and pretty conservative mutual fund organization here with Wellington at this point in time.
• ▶ 30:43 David Rosenthal Was exactly the wrong thing for this moment here in the mid-nineteen sixties for Wellington and its young hotshot new president, because Wall Street and the investing world is undergoing a sea change from the hyper-conservative mode that…
• ▶ 34:18 David Rosenthal The exact opposite of Wellington management and Walter Morgan's approach.
• ▶ 36:30 David Rosenthal So for a long time, Wellington management company just managed the Wellington fund, and Fidelity had just had the Fidelity fund.
• ▶ 38:01 David Rosenthal Basically zero, like startup initiative within Fidelity itself, already a small firm, to a three hundred and forty million dollar fund here by 1965 when Bogle is taking over Wellington from Mr.
• ▶ 38:16 David Rosenthal So this is actually the backdrop to why Morgan decided to hand the firm to Jack here in 1965, even though Jack is still so young.
• ▶ 38:57 David Rosenthal To fix this firm.
• ▶ 39:13 David Rosenthal So Wellington and its kind of whole class of funds, the balanced funds that we talked about, it's stocks and bonds together, a complete investment program in one security.
• ▶ 40:37 David Rosenthal So all this is happening right at the same time here in 1965 as Jack is taking the reins at Wellington.
• ▶ 42:37 David Rosenthal Pretty quickly, he decides that the best course of action for him as the new leader of Wellington is to take the, well, if you can't beat them, join them approach, or more specifically, have them join you.
• ▶ 42:51 David Rosenthal So he goes out and he starts looking for go-go style fund managers to merge with and absorb into Wellington and transform Wellington into what Fidelity has done.
• ▶ 44:00 David Rosenthal Wellington,
• ▶ 44:14 David Rosenthal Yes, but back to the business model of the management companies where you're getting paid fees based on a percentage of assets under management, like the revenue and fee streams flowing into Wellington, even though they're declining- Super…
• ▶ 44:30 David Rosenthal Wellington and Jack feel like they're in such dire straits and need this merger, need to bring this go-go blood into the firm so much that he ends up offering 40% of the equity in the management company to the four partners coming in from…
• ▶ 44:52 David Rosenthal Yeah, two billion dollars for Wellington, seventeen million dollars from Ivest,
• ▶ 45:05 David Rosenthal Some observers feel that Wellington paid too high a price for management personnel.
• ▶ 45:37 David Rosenthal Institutional Investor Magazine runs a cover story on the merger titled, The WizKids Takeover at Wellington.
• ▶ 47:18 David Rosenthal So the iVest fund, they ported over the iVest fund itself into Wellington.
• ▶ 49:44 David Rosenthal As all these losses are piling up at Wellington and clients are withdrawing and they're shutting down the iVest fund.
• ▶ 51:49 David Rosenthal They're in the management company, in Wellington Management Company, along with Jack and along with the four iVest partners.
• ▶ 53:40 David Rosenthal The four iVest partners band together, rally enough votes from the public shareholders, and they fire Jack as CEO of Wellington Management Company.
• ▶ 54:38 David Rosenthal So January, 23rd, 1974, Jack is fired as CEO of Wellington Management Company.
• ▶ 54:51 David Rosenthal Wellington Management Company and the actual Wellington Fund, and at this point in time, funds, they had several funds,
• ▶ 55:02 David Rosenthal So Jack was CEO of Wellington Management Company.
• ▶ 56:22 Ben Gilbert So the funds actually do have the power to pick whether or not they want to stay with Wellington management or go find a new company that could advise them on how to invest this pool of capital or do something different, et cetera.
• ▶ 56:43 David Rosenthal The next day, after Jack is fired as CEO of the management company, he calls a special meeting of the board of directors of the funds, which is his prerogative as chairman, and he proposes that they, as the board of the funds, vote to,…
• ▶ 59:53 Ben Gilbert Because it is kind of nice relying on Wellington.
• ▶ 1:00:43 David Rosenthal So long accepted, so satisfactory for an infant industry as it grew during a time of less stringent ethical and legal standards is really the optimum structure for these times and for the future and for the Wellington group of investment…
• ▶ 1:02:17 David Rosenthal And we will endorse some very, very small degree of separation from Wellington Management Company, but not everything, and not to start.
• ▶ 1:02:50 David Rosenthal Those will remain with Wellington Management Company, but we will run a little experiment, all the back office, tax, accounting, legal, fund holder registers, et cetera.
• ▶ 1:04:28 David Rosenthal Fully cut Wellington out.
• ▶ 1:04:52 David Rosenthal And Wellington, even though they're much smaller now, is still a widely known, well-respected big firm in the industry.
• ▶ 1:05:01 David Rosenthal So Forbes magazine runs a piece about all of this infighting happening at Wellington.
• ▶ 1:07:39 David Rosenthal Uh, the Duke of Wellington was the British prime minister and military leader for whom Walter Morgan had named the Wellington firm.
• ▶ 1:08:48 David Rosenthal Files for incorporation, commencing operations, and taking over the back office of the Wellington Fund and the other funds that Wellington managed.
• ▶ 1:18:51 David Rosenthal Yeah, we don't need to involve Wellington.
• ▶ 1:28:45 David Rosenthal Remember we talked about the three things that a management company does and what the Vanguard fund board, the Wellington fund board allowed Jack to do.
• ▶ 1:28:52 David Rosenthal They said, hey, we'll let you just do administration, but investment advice and distribution still have to live with Wellington.
• ▶ 1:35:48 David Rosenthal Small legacy Wellington fund called the Exeter fund into the index fund just to keep it alive and get enough capital into the fund to keep operating it.
• ▶ 1:36:43 David Rosenthal In the Vanguard 500 index fund, and again, also its sister fund, the total stock market index, you know, biggest collectively fund in the world today comes not from the IPO of clients into the index fund itself initially, but the majority…
• ▶ 1:41:40 Ben Gilbert And they sort of inherited it by virtue of having some responsibilities for the Wellington funds that they shared with the Wellington management company.
• ▶ 1:49:27 David Rosenthal So before he even becomes CEO of Wellington Management, that was his first heart attack.
• ▶ 2:43:57 David Rosenthal So even though Fidelity and Wellington slash Vanguard all started in the same business as fund managers, Fidelity realized, Hey,
• ▶ 3:04:51 David Rosenthal Well, listeners might have noticed, we never really said what happened to Wellington.
• ▶ 3:05:01 David Rosenthal The crazy thing, they went on to build their own trillion dollar firm, a hundred percent devoted to active management.
• ▶ 3:05:15 David Rosenthal So, if you know anything about the active management space today, Wellington Management Company is one of the largest players out there, and yes, it is the very same company.
• ▶ 3:05:26 David Rosenthal Wellington Management Company, all the way back to Philadelphia and Walter Morgan.
• ▶ 3:05:30 Ben Gilbert So they built this giant pure active firm in the era that massively bent toward passive indexing.
• ▶ 3:05:42 David Rosenthal So after Jack left, the original four Ives partners took over the firm and slowly rebuilt it into something new.
• ▶ 3:05:53 David Rosenthal Remember, it had been a public company.
• ▶ 3:05:57 David Rosenthal Retake it private in a management buyout.
• ▶ 3:06:02 David Rosenthal And then they basically radically reconfigure what Wellington is.
• ▶ 3:06:30 David Rosenthal So the second half of the 19 eighties, as the stock market rebounds, Wellington management gets totally rebuilt.
• ▶ 3:06:40 David Rosenthal At one point in time, they take over management of MIT's endowment, like the actual MIT.
• ▶ 3:06:51 David Rosenthal They obviously have always been in equities.
• ▶ 3:07:06 David Rosenthal Wellington manages about 1.3 trillion in assets today.
• ▶ 3:07:16 David Rosenthal And then the best part, Wellington Management
• ▶ 3:07:44 David Rosenthal Wellington Management Company.
• ▶ 3:08:04 David Rosenthal It's time to bury the hatchet, and the relationship between Vanguard and Wellington has never been better.
• ▶ 3:08:11 David Rosenthal Wellington manages several other
• ▶ 3:10:37 Ben Gilbert The other thing, Vanguard was sort of in a unique place to rely on Wellington's active stuff to provide profits during the dark wandering years.