What New CEO Bill McNabb Has in Mind for Vanguard
A conversation with Vanguard's new leader.
The McNabb era has officially begun at Vanguard. Before Bill McNabb took the CEO reins from John Brennan Aug. 31, 2008, though, I spoke with him at length about the bear market, what scares him, and other topics. A portion of the edited transcript follows here. You can read more of it, including McNabb's thoughts on a potential Vanguard hedge fund, recent manager changes, and other possible new developments, in September's Vanguard Fund Family Report, which will be published later this month. Here's a sample of my conversation with Vanguard's new leader.
Q: How has Vanguard fared thus far in this bear market?
A: I think we've fared very well on a couple of fronts. Our fixed-income guys are often characterized as just running very low cost, highly predictable funds, but they're also extraordinarily good analysts. They were very early to recognize some of the potential problems. So, our fixed-income funds have held up really well and are well clear of all of these kinds of exposures that many others have experienced.
From a business standpoint, one of our great strengths is the diversification of our fund lineup. We're continuing to see some long-term flows into different categories. In the last six or seven months in particular it's been pretty close to a 50/50 split between stocks and the fixed-income and money market side, which insulates us a little bit better than other firms that are tilted more one way or the other.