Vanguard

“We used to have this graph back when I worked at Vanguard a million years ago and the graph was like S and P 500 per return, which was, you know, let's call it 10% on average over 10 years. And then it was average investor return, which was like three and a ha…”

“This is the only business where you don't need an average. Somebody needs an average phone. Somebody needs an average car. You do not need an average manager. Vanguard is happy to do it for you for two basements.”

“Vanguard is the largest shareholder of most U.S. Corporations, and together with the other big index funds like BlackRock, State Street, and Fidelity, they own 24% of the entire U.S. Stock market.”

“None of those other firms would be in this market or doing it in the same way if it weren't for Vanguard.”

“Because of Vanguard's relentless cost-cutting and low fees, Vanguard has saved investors over five hundred billion dollars in fees and trading costs since its founding in 1975, and as a recent book The Bogle Effect argues, Vanguard's actions also forced the ha…”

“People estimate that Vanguard pays S&P Global something like three to four hundred million dollars per year, and is their single largest licensing client, and the licensing segment of their business as a whole does 1.85 billion dollars a year, and to your poin…”

“He was born with a rare genetic heart disease called arrhythmogenic right ventricular dysplasia, or ARVD. And that means that Jack suffers his first heart attack in 1960 at age 31.”

“He waits a 128 days in the hospital waiting for a heart transplant. And he keeps working the whole time. He hasn't officially transitioned out of the CEO role and given it to Brennan yet.”

“99% of Vanguard's AUM came after Jack stepped down.”

“First of all, you should know Vanguard did not lay anyone off during the financial crisis, which is kind of unbelievable.”

“From 2014 to 2019, Vanguard takes in 1.2 trillion in cash inflows versus five hundred billion for the whole rest of the industry combined.”

“At the time of his death, Vanguard managed an aggregate of five trillion dollars over twenty million clients.”

“They manage in 2019 13 of the 15 largest individual funds in the entire world.”

“So many of their customers, of their AUM, don't actually have a relationship with the company. They are invested in Vanguard ETFs via their direct relationship with a different brokerage, primarily Fidelity.”

“Fidelity is just a better product and product experience than Vanguard. So during the pandemic especially, it exposed that Vanguard's customer service and technology is like jank. It is not good. And there were a lot of horror stories of trades not going throu…”

“Vanguard, the downside of its structure is that there are no excess profits that can be invested for the long term in things like technology and things like customer service.”

“In May of 2024, Vanguard made another big CEO announcement that they were bringing on the first outside CEO in the firm's entire 50 year history, Saleem Ramji, from BlackRock, where he was, until that point in time, head of the iShares division.”

“There is this interesting question, which is that they haven't really had any new innovations in a while, call it a decade, that Have been really meaningful to the business and that they've continued to scale.”

“There actually is no built-in incentive or obligation to grow. With a structure like Vanguard. The only reason to do so is if you believe the mission of the company either As set up by Jack, or as it should be today, is to bring the service to as many people a…”

“So total assets is now 12 trillion dollars. Two trillion of that, interestingly, is active.”

“Vanguard's average ETF and mutual fund expense ratio is now down to 0.07% with some ETFs, like the one that I'm in, the VLO is 0.03%. The industry average across mutual funds and ETF is 44 basis points. So that is six and a half times Vanguard's average.”

“84% of Vanguard's funds have outperformed their peers over the last 10 years.”

“They have 20,000 employees, they have fifty million investors worldwide, but notably, the last thing I'll say is, a little over 90% of their investors And their investor capital is in the US. So they're not nearly as global as BlackRock or Invesco or Franklin …”

“And then the best part, Wellington Management Still does the investment management for the Wellington fund within Vanguard, even to this day.”

“I mean, even Vanguard's real estate on their campus in Malvern, when they were constructing that, they tapped the shareholders, they tapped the fund holders for essentially construction loans.”

“The investors are the board of directors, or elect the board of directors, and thus will always vote To lower fees when they can lower fees, because it's in their own interest.”

“If you were to try to start a new one today, in order to break even, you probably need one or two percent fees. Starting from a zero asset base, and so you'd be inherently non-competitive. You, if you're not already big, or you don't go raise a giant amount of…”

“I think this may be the most extreme example of counterpositioning ever. Bogle did something that was essentially non-economic. There's no economic incentive to create this company in the first place. Their ownership and fee structure was an advantage that can…”

“There's no chance that I'm going to sell my Vanguard index fund and realize the capital gains tax only to switch to a different index fund.”

“Jack had the insight that running a successful mutual fund is actually not a differentiated product. It is a commodity. What you are seeking is the highest possible long-term return on your capital. That is not like buying a unique piece of jewelry. It is like…”

“We were still 80% active at the time, 20% passive, but you could see what we were doing.”

“We've stayed away from things that are hot or nichey. I don't think you're going to see us offer a jet index like others have done, capturing airline returns. Too narrow, too specific for us. Better served by an active investor.”

“At times we will do small deviations from the index where we see that we can recover value for our shareholders. Maybe there's a corporate action. Maybe you could take cash or shares. We're going to take the one that has the greater value. Maybe the index trea…”

“Something like a 500 index fund, we're gonna see tracking error be no more than a couple basis points. Typically, less than one.”

“Statistically, we've seen that we can buy it from the bank at the time of offer, and by the time it's added to the index, we've usually bought it at a lower price than when it's added.”

“95% of the money made in the program goes back to the fund. The five percent of it Is kept to run the program.”

“We stay away from things like telling the company what business to be in or how to operate their business. We're more about making sure we get good governance over a long period of time.”

“We've introduced investor choice. Investor choice is allow the shareholders of our funds to express a point of view. Around how they want the companies in our portfolios to be run. For that, we think about returning the vote to them and they can choose one of …”

“Number one is this portfolio manager trader is one person or one team. It's the ability to instantaneously make the trade-off between I could trade something exactly like the index. I think I might be able to add value. I can make that decision because I have …”

“I have roughly 30 people here in the U.S. I have another 20 folks globally.”

“We're taking very small bets where we have 25 years of history of running index funds where we believe this is something where we can add value. It's no different than an active manager. It's a measured risk. It's just extraordinarily tiny compared to taking a…”

“We have about eight and a half trillion of index fund assets.”

“We believe privates belong in everyone's portfolio.”

“We own on average about eight percent of every company in America that's free floated. Most importantly, we say, who are we owning them on behalf of? These are fifty million Americans, not Vanguard owning eight percent of the company.”

“The majority of our investors are long-term holders, whether they're in ETFs or mutual funds. Holding periods at Vanguard are five to 10 years.”

“We do have a partnership with Harbor Vests for some of our high net worth retail investors. We've had some success there gathering assets.”

“Unfortunately, a lot of Index innovation is marketing positioning for sales and not good for investors.”

“You don't trade on average a trillion dollars of execution on an annual basis by going in and touching every stock. We're using algo's technology to do it.”

“Actually if you look at where people ACAT accounts from, You know, where they like consolidate brokerage accounts from for us. It's Schwab, Fidelity, E-Trade, Vanguard, and then Merrill and Robinhood. So, so we are much more competing with the incumbents than …”

“My entire net worth is a house, cash, Vanguard index funds, and shares of Markel where I'm on the board of directors, and that's it.”

“At the end of the day, there wasn't anyone to take the public equity side of the bet. I reached out to some friends at Vanguard, but Vanguard isn't just a public equity index fund manager.”

“There's a new study from Vanguard where they analyze job growth and wage growth in occupations that are highly exposed to AI automation versus all occupations. And they find that both job growth and wage growth is higher, not lower in the occupations that are …”

“Your willingness to ask questions and look stupid while everybody else tries to Position themselves, especially when you're young, is what's going to make you stand out.”

“DAF, like from Fidelity, Vanguard, CapShift, they're sitting on around a Two hundred and fifty billion dollars in money, because these people want the tax write-off, but they don't know what to invest in, so they park it in these DAFs, and these DAFs eventuall…”

“There are really six managers that dominate the market, probably have 85 plus percent of the assets. That's Vanguard, Fidelity, BlackRock, State Street, T. Rowe, and Capital Group.”

“I think there was a moment for me where I bought like, I don't know, a million dollars of Vanguard mutual funds.”

“To Terry's point, if Vanguard has 10 trillion, putting 10% of that into venture would move the needle, but I just don't think ordinary investors should be doing this stuff. I don't know. There's just I just, I, it's just part of greed. Too much greed.”

“Intellectually, as I said, this would be like if Vanguard said, you know, we've been thinking active management is the way to go.”

“Vanguard brings in more money every month than Robin hood has in total.”

“BlackRock, State Street, Vanguard have 20 trillion dollars of capital. They are the single largest shareholder, 95% of the S&P 500, and they have an outsized influence with the 20 to 30% of the shares they can vote.”