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Friday, January 05, 2018

Buckley Took Over Vanguard. What's Next?

News summary by MFWire's editors

The world's largest mutual fund company and fastest growing asset manager still has "a long way to go" in the eyes of its new chief. Two business newspaper giants this week offer glimpses as to what's next for the "flow monster" that Bogle built.

Mortimer J. Buckley
the Vanguard Group
CEO, Director
On Tuesday Tim Buckley took over from Bill McNabb as Vanguard's [profile] CEO, as expected. Buckley tells the Wall Street Journal that, despite Vanguard's $5 trillion in AUM and its record $368 billion in net inflows last year, the Valley Forge, Pennsylvania-based asset manager is only on "rung three of a 50-rung ladder."

"We're just getting started," Buckley tells the WSJ. "Yes, we have $5 trillion. That's not our money, that's your money. Our revenues are more like $5 billion — we're not Amazon."

Buckley, in an interview with the Financial Times and in the interview with the WSJ, points to Vanguard's roboadvisor-esque Personal Advisor Services unit as a key business he plans to invest more in. The unit has risen to about $100 billion in assets since launching in 2015, and it combines roboadvice and human advice. He highlights onboarding clients as the most expensive part of that service.

"Once that's done you can scale the business very well," Buckley tells the WSJ.

The articles offer interesting tidbits on Vanguard's growth, too — tidbits that are worth pondering. For example, though Vanguard is the world's biggest mutual fund shop, the second biggest asset manager, and the fastest growing asset manager, most of its growth is still driven by the markets; Vanguard's AUM rose about $1 trillion in 2017, but $368 billion of that was thanks to net inflows while the remaining $600+ billion was from market gains.

Vanguard's record $368 billion in net inflows in 2017 compares to a record $246 billion in net inflows into BlackRock's iShares [profile] business, the world's largest ETF shop. (Stay tuned later this month for full-year 2017 numbers for all of BlackRock's business, which with about $6 trillion in AUM is the only asset manager bigger than Vanguard.) Vanguard's velocity of net inflows is still faster than iShares, but iShares' net inflows appear to be accelerating at a faster pace. Vanguard's net inflows rose 13.9 percent from $323 billion in 2016, a $45 billion net inflows increase. Yet iShares' net inflows rose 76 percent from $140 billion in 2016, a $106 billion increase.

Vanguard watchers and other fundsters who read the FT and WSJ pieces will find other tidbits, including: $368 billion in net 2017 inflows translates into more than $1 billion in net inflows every day; Buckley's father is a famous heart surgeon and Harvard professor, Mort Buckley; international expansion is high on Buckley's priorities list; and Buckley has spent his entire career at Vanguard, starting out as an assistant to famed Vanguard founder Jack Bogle. 

Edited by: Neil Anderson, Managing Editor

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