Passive investing seems to gain more traction daily. What are your thoughts on Vanguard as a firm? The organization generated $111 billion in net cash-flow in the first quarter alone.
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Vanguard, BlackRock, and State Street are the largest Asset Managers. Those 3 firm have at least $1T in passive assets in addition to a healthy chunk of Actively managed assets. If the active vs passive trend keeps up, I would not be surprised to see consolidation in the industry with the larger Asset Managers eating up smaller ones as pricing pressure gets intense.
Is Vanguard destined to dominate this industry? (Originally Posted: 12/01/2010)
Seems like Vanguard has single-handedly won the industry over the past two years and they're showing no sign of slowing down.
I was reading WSJ this evening and noticed a story about how they were the only fund company to not partake in the Fed's bailout program for money market funds, even though they were one of the largest players in that asset class.
Their ETF assets appear to be on super-growth mode, and Blackrock/iShares don't seem to have any chance at combating this...
Their mutual fund assets are consistently quoted as the tops in the industry for bond and equity inflows...
Yes, I understand it all comes down to their operating model ---> unbeatable expense ratio etc... but with the loss of investor trust post-2008, how do the other big players in the industry stand to compete against a seemingly flawless and non-wall-street-like firm?
How do they manage to attract/retain top talent and keep costs so low? It can't be all economies of scale...
They are (one of) the BSD. Because of that, they are able to keep costs low by getting "great liquidity" from market makers. There probably is great talent at the firm, but that has nothing to do with it at this point.
They have operational and marketing talent, but not necessarily investment Talent. Most of what they manage in-house are indexes or enhanced indexes.
The management of their "active" strategies is mostly outsourced to other top tier managers. IE Wellington manages the Vanguard Wellington Fund, which is Vanguard's largest active equity fund
Well equities aside then, what makes PIMCO more of an elite fixed income / AM shop than Vanguard?
Forgot to mention that part of the reason their ETF biz is growing so fast is that they are converting standard index mutual funds they have had for years into ETFs. So a lot of their ETF AUM represent transfers.
They have
omg are you serious. Vanguard does indexes i.e. a mindless computer puts together a portfolio that does nothing but track the market. PIMCO is trying to beat the market...entirely different market, they actually employ people with brains.
What is all this bullshit regarding index investing recently. Especially in fixed income it's a great way to get burned.
you sound like a big pompous douchebag
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