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Eric Balchunas

lines on the record: 162
first: 2022-08-26
most recent: 2022-08-26
sittings or episodes: 1
sources: podcast

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“No doubt. And that's why the book is on him. But I make points to say that I would have done the same thing as them. I don't think I would have shared. I would have thought, well, we earned this money. Let's spend it. Let's hire new people. Give us ourselves raises.”
2022-08-26 · Masters in Business · Eric Balchunas on the Vanguard Effect · IDENTIFIED FROM THE TRANSCRIPT · source
“A, if I was an active manager, I wouldn't have shared economies of scale. I would have bought the sports stage. None of them did. I know. And so they did what most of us would have done. Same thing in the 80s. I would have gone crazy in the 80s culture.”
2022-08-26 · Masters in Business · Eric Balchunas on the Vanguard Effect · IDENTIFIED FROM THE TRANSCRIPT · source
“Nobody cared. So he was doing this at times when Wall Street was not, it was decades before the world figured out this actually makes sense. And that vision is pretty rare. And I have this sort of comparison in the book where I look at 1987 and the movie Wall Street comes out. Gordon Gecko is giving his greed is good speech. Bogles in Valley Forge given the Christmas speech to all the employees. And the side-by-side of all these young people watching Gordon Gecko wanting to go to Wall Street and make a ton of money. And then Vanguard, Vogl, is sitting there talking about like, oh, we shaved one basis point off the fun this year. If we keep doing good fiduciary. And like in 87, and I say this in the book multiple times.”
2022-08-26 · Masters in Business · Eric Balchunas on the Vanguard Effect · IDENTIFIED FROM THE TRANSCRIPT · source
“In the world. Exactly. So I do think there are these outliers of people who are that hardcore. But you're right. And again, this is what made the Vanguard story interesting. And I also think what made it interesting was lowering fees in the 70s, 80s, and even the 90s, nobody really cared. Like there wasn't a demand during the bull market.”
2022-08-26 · Masters in Business · Eric Balchunas on the Vanguard Effect · IDENTIFIED FROM THE TRANSCRIPT · source
“Yeah, they all love Steve Jobs and that mindset, but they didn't apply it. And I have a section called the Steve Jobs Rule, which is if you don't cannibalize yourself, somebody else will. Right. And I think you either have to cannibalize yourself or create enormous value and keep just throwing value and value and value to keep that price steady.”
2022-08-26 · Masters in Business · Eric Balchunas on the Vanguard Effect · IDENTIFIED FROM THE TRANSCRIPT · source
“Was a missed opportunity, and I find it interesting that they were so disrupted when their whole job is to analyze companies and stocks and try to figure out who's going to get disrupted and why. And they've seen Amazon's come along in these other industries, but it's like they never applied it to themselves. And I find that kind of interesting that they were so disrupted and they're students of disruption.”
2022-08-26 · Masters in Business · Eric Balchunas on the Vanguard Effect · IDENTIFIED FROM THE TRANSCRIPT · source
“The high cost warranted. And in the case of asset managers, I think I have a chapter called The Fall and Rise of Active, because Active is evolving in different ways. But the fall is a missed opportunity. I think these companies in the 80s and 90s, when they got enormous, they got into 40k plans, that 70, 80, 90 basis points they charge even more was once you got 10, 30, 50 billion dollars in that fund, they never shared any of that. And I think it was a missed opportunity. Had they shared a little bit of it, they still would have made tons of money, and they would have been able to bank goodwill, lower the fees, and increase their beat rates against the benchmark because their fees are now lower.”
2022-08-26 · Masters in Business · Eric Balchunas on the Vanguard Effect · IDENTIFIED FROM THE TRANSCRIPT · source
“Where he really had problems, and he wrote many books that are just all one big rant, especially he wrote a rant about the 2008 crisis and he wrote a rant about 2001 in Enron. And these books are where he just is like, he's unfarnished. And other books, he's just a little softer, but he found that that was what pissed him off the most, is when people broke their fiduciary and stewardship bonds, not necessarily active or even high cost. It was about”
2022-08-26 · Masters in Business · Eric Balchunas on the Vanguard Effect · IDENTIFIED FROM THE TRANSCRIPT · source
“Yeah, Bogel wasn't necessarily against high cost or active. With a word he focused it on was stewardship. He thought there are good stewards and bad stewards. Because he says, if you're a small company asset manager, you probably need to charge 1% because you've got to keep the lights on. 1% of a million isn't a lot of money. One percent on 30 billion is a ton of money. And so what he thought was they broke their stewardship by not sharing any of those economies of scale. The dollar fees were enormous. So I think that's ultimately where he was trying to separate what they did from others because, again, I found in a lot of his books he was proud of some of the active funds. So I thought stewardship was the main word and you can be active and be a good steward. You could be even moderate cost than be a good steward. I think the idea is, are you, you know, sort of totally abusing the relationship you have as the controller of somebody's money? And I think that's...”
2022-08-26 · Masters in Business · Eric Balchunas on the Vanguard Effect · IDENTIFIED FROM THE TRANSCRIPT · source
“That, speaking of masters in business, the two masters, it's hard to serve two masters. And his structure was such that there was only one master, which was the owner of the company, was the investor. And I know this story gets told all the time. People kind of know it, but again, when you dive into it and trace it, the amount of money this guy commandeered and the idea that no one's copied it just makes this such a fascinating story. I heard your interview with Spencer Jacob and the meme stocks and you said you couldn't make this fiction because you could never invent it. No one would believe it, right? I would say the same thing about Vogel. You could never dream this guy up in like the 60. You just couldn't dream this maybe possibly. And I know the story isn't that interesting. But if you, again, the more you think about it and ponder it, you're like, wow.”
2022-08-26 · Masters in Business · Eric Balchunas on the Vanguard Effect · IDENTIFIED FROM THE TRANSCRIPT · source
“And where's the money going to come from? The investors or your clients. And that is a vicious tension to live in. And people try their best. And some companies, like you take a BlackRock, good people work there. They like to serve their clients. I think they like what Bogle pushed on to them, but they are still having to live with that inherent intention. And there's probably going to be times where they have to make a decision, well, we should try to get them into the higher cost one because we have to meet our revenue goals. And this is the sort of thing that Bogle would talk about anytime he had a chance, which is the two masters.”
2022-08-26 · Masters in Business · Eric Balchunas on the Vanguard Effect · IDENTIFIED FROM THE TRANSCRIPT · source
“Why are they investors? The Mutual Fund overnight trading scandal that Elliot Spitzer investigated. Here's the thing that I feel for. The rest of the world is that the structure of a publicly traded asset manager is such that you have to serve the shareholders who want more money.”
2022-08-26 · Masters in Business · Eric Balchunas on the Vanguard Effect · IDENTIFIED FROM THE TRANSCRIPT · source
“So keep in mind that trust it gets built over 30, 40 years because people ask me all the time, how isn't Vanguard's market share eroding when everybody has cheap index funds now? Even JP Morgan Goldman, who have armies of advisors, they could just move them all in. And I'm like, well, you have 44 years of trust built up, goodwill, banked, and the low cost. So it doesn't matter if somebody's zero in Vanguard's three basis points. It's not enough because the trust in the branding is so strong and it will be for a while. It could erode eventually, but right now that trust is so underrated. It's not just the fees.”
2022-08-26 · Masters in Business · Eric Balchunas on the Vanguard Effect · IDENTIFIED FROM THE TRANSCRIPT · source
“To know, but you take the bowl and go home, that quote? Yeah, it basically over time, it was really other people shooting themselves in the foot. Active funds showing that they, you know, people's experience. Over time, that added up. And then you see Vanguard over here, and they just look Boy Scout in comparison.”
2022-08-26 · Masters in Business · Eric Balchunas on the Vanguard Effect · IDENTIFIED FROM THE TRANSCRIPT · source
“It was hard to avoid them, man. I think when you curse, you're saying your best stuff. That's why you curse, because you're so into it. So it happens to be your best points when I listen back to your audio happen to contain curses. And maybe there's a correlation there.”
2022-08-26 · Masters in Business · Eric Balchunas on the Vanguard Effect · IDENTIFIED FROM THE TRANSCRIPT · source
“Who kind of just saw it makes no sense to charge all this money because when stuff, when you start to compound, much of that compounding then goes to the intermediary, not you.”
2022-08-26 · Masters in Business · Eric Balchunas on the Vanguard Effect · IDENTIFIED FROM THE TRANSCRIPT · source
“And I think that resignation is made behavior. And there's all this stuff on psychology and behavior that seems to be written about. But I'm like, I try to imagine, try writing all that stuff if all you have is active mutual funds that charge 1%. It's much harder. It's easier to reflect on behavior and how important it is when you have a cheap index fund. So I think Bogle's contribution to behavior was monumental just by introducing the index fund. And also think Bogle was interesting in that he wasn't really into the efficient market hypothesis. He wasn't really an academic. A lot of what he did, though, impacted those worlds, I think, and people might see him as like thinking that way. But I think he was just a very practical guy.”
2022-08-26 · Masters in Business · Eric Balchunas on the Vanguard Effect · IDENTIFIED FROM THE TRANSCRIPT · source
“It's just coincidental. There's also this. See, the Vanguard flows are so good and persistent because, and I asked Bogle, why are Vanguard investors so disciplined? And he said, because they had to find us. These are people who weren't stuck in it because they got a kickback from a fund company through a broker. They found us and they're usually pretty with it. And I also think this is, and I point this on the book. Behavior of Vanguard investors is off the charts. Good. And I think advisors like you who are specialized in behavior, I think your job is made a little easier by just introducing a cheap index fund. I think it's easier to behave when you have a cheap index fund as a tool because you're like, I call it like a resignation. You're like, what am I going to do? Hop onto some high flying who has a good year.”
2022-08-26 · Masters in Business · Eric Balchunas on the Vanguard Effect · IDENTIFIED FROM THE TRANSCRIPT · source
“And in Vanguard astonishingly took in flows every month in 2008, which even in October where we were already weary of going down. In October 2008, the market was down 17% in a month, and they took in money. And that's when I really look back at this. I might have been starting to look at this at 2014-15. That's when I really got on this whole notion that bear markets are actually going to speed this thing up. And we've been bringing that drum internally, and we've been proven right so far. And this year is no exception. Vanguard is leading flows. I think I did a static, I forget the exact flows. It's something like Vanguard's taken in, I don't know, 80, 90 billion. The rest of the industry combined is like negative 250.”
2022-08-26 · Masters in Business · Eric Balchunas on the Vanguard Effect · IDENTIFIED FROM THE TRANSCRIPT · source
“2008 was the year that made Vanguard and ETFs. It was one of those years where a lot of active managers did worse in the market. And so it was one of those, oh, you couldn't even save me from the 35%. Your whole reason for existence.”
2022-08-26 · Masters in Business · Eric Balchunas on the Vanguard Effect · IDENTIFIED FROM THE TRANSCRIPT · source
“So I would say a bear market, in my opinion. We have a phrase on the team is that bull markets are good for passive. Bear markets are great.”
2022-08-26 · Masters in Business · Eric Balchunas on the Vanguard Effect · IDENTIFIED FROM THE TRANSCRIPT · source
“You're going to start to see real erosion because you're going to have the assets come down from the market, the outflows, and there's still arguably a couple of trillions stuck in there because of taxes.”
2022-08-26 · Masters in Business · Eric Balchunas on the Vanguard Effect · IDENTIFIED FROM THE TRANSCRIPT · source
“Especially in a bear market. Bear markets are where Vanguard's market share really starts to grow because there's no asset appreciation, asset growth, or market appreciation asset growth. The only thing that can actually grow your assets or stop the asset loss is flows. So once flows are the only variable, the market share percentage that Vanguard has start to go, it doubles the rate of growth. So bear markets, because over the years here, oh, just wait till a bear market. That's when all this Vanguard stuff's going to be. We've heard that constantly. I'm like, it's laughable. I'm like, if you're active, you should root for Fed liquidity forever. Right. Market appreciation forever. And just live with your outflows because the market appreciation will totally overwhelm that and you'll still stay rich. A bear market is when you're probably going to really find...”
2022-08-26 · Masters in Business · Eric Balchunas on the Vanguard Effect · IDENTIFIED FROM THE TRANSCRIPT · source
“Yeah, and then there are a lot of people see outflows. So net wise, you know, Vanguard and BlackRock are really King Kong and Godzilla at this point. And then there's just this huge gap. But if... Vanguard still takes in more than BlackRock, though, and we know how big they are. So ultimately, Vanguard will pass BlackRock in assets.”
2022-08-26 · Masters in Business · Eric Balchunas on the Vanguard Effect · IDENTIFIED FROM THE TRANSCRIPT · source
“That's exactly. That's what's so interesting about this guy is that's a completely different trip to actually root for your market share to a road to think that that's like saying I want to actually change the whole Whole industry. And it is happening. The problem is overall, Vanguard still leads and flows every year. Like clockwork BlackRock. Typically, in a given year, Vanguard, let's say, takes in 10. BlackRock will take in seven. And then, you know, go maybe three or two is the next one.”
2022-08-26 · Masters in Business · Eric Balchunas on the Vanguard Effect · IDENTIFIED FROM THE TRANSCRIPT · source
“Yeah. He talks about Vanguard's mission will start, we'll know Vanguard's mission is beginning to be successful when our market share erodes.”
2022-08-26 · Masters in Business · Eric Balchunas on the Vanguard Effect · IDENTIFIED FROM THE TRANSCRIPT · source
“And so, in my book, a lot of people were like, nobody wanted to do this. Only Bogle wanted this. Everybody else did it because they had to. And that mattered to some people, but ultimately that's how everybody saw it. And I agree. And that's the Vanguard effect. And that's why I was so attracted to this topic, because as somebody looks at the flows every day, I'm like, damn, man, every year we look at the flows and I'm like, if you pull the thread on basically 90% of this money, you end up in 1974, and it's all traced back to this guy and this decision to set this company up like this. And that is interesting that nobody copied Vanguard's mutual ownership structure, but it's the governing force of the whole enchilada now. Basically, people are, they have to copy it, even if they don't structurally copy it, they have to copy the products, which leads me to a statement that Bogo made that blew my mind. I didn't know he said this. I had noted some of his quotes, but not all of them. In one of his books, character counts where he goes over his speeches.”
2022-08-26 · Masters in Business · Eric Balchunas on the Vanguard Effect · IDENTIFIED FROM THE TRANSCRIPT · source
“So that mutual ownership company that he created, and once it got really popular and the gradually then suddenly kicked in in 2008 and they started getting trillions. Once the trillions started to kick in, a couple things happened. A, you can start to calculate the savings that Vanguard saved investors. If you take the money they would have had in, say, a 60, 70 basis point active fund versus a 10 basis point index fund and the turnover. The trading cost is like another 1% for active funds that you don't even see. You add that up, you know, arguably it's $500 billion to a trillion. There's ways it could be more. Bogle wanted to reinvest the savings, and that grows it more, but let's say it's a lot of money. Now, the Vanguard effect is everybody saying, oh, they're getting all these flows. We're going to have to copy their low-cost index funds.”
2022-08-26 · Masters in Business · Eric Balchunas on the Vanguard Effect · IDENTIFIED FROM THE TRANSCRIPT · source
“Because I think low cost is really what he pushed forward and what is here to stay. Indexing is such a, you know, there are active funds that are very, very passivish. Well, they're a closet of indexers. We'll come back, hold that thought because we're going to come index funds that are pretty active. So indexing is a very nuanced conversation. What isn't nuanced?”
2022-08-26 · Masters in Business · Eric Balchunas on the Vanguard Effect · IDENTIFIED FROM THE TRANSCRIPT · source
“Oh, right. It still would have taken a while. It would have been the graduate, and suddenly it just would have all happened with active instead of passive. It would have happened, though.”
2022-08-26 · Masters in Business · Eric Balchunas on the Vanguard Effect · IDENTIFIED FROM THE TRANSCRIPT · source
“That's my opinion. You would Over time, Vanguard's active funds would rise to the top in the 10 and 20 year time frame. But it would take”
2022-08-26 · Masters in Business · Eric Balchunas on the Vanguard Effect · IDENTIFIED FROM THE TRANSCRIPT · source
“Or how about the Russell 1000s different than the SP 500? The SP 500 is literally active. I mean, it's really because it's cheap. And if you were to have, let's say indexing wasn't even a concept. We don't even know what it is. If you had made active mutual funds. And got them down to those low fees that Vanguard's active funds currently are at, they would utterly destroy. They'd be the biggest active mutual fund shop six times over”
2022-08-26 · Masters in Business · Eric Balchunas on the Vanguard Effect · IDENTIFIED FROM THE TRANSCRIPT · source
“But it's the low cost. This whole thing that we're experiencing with what I call the Bogle effect, it's low cost. That's the thing. I call it the great cost migration. It is much more powerful than indexing. Indexing is really just taking a group of stocks and market capweighting them, right? And each index company does it a different way. There is no stick. Right. DFA.”
2022-08-26 · Masters in Business · Eric Balchunas on the Vanguard Effect · IDENTIFIED FROM THE TRANSCRIPT · source
“Because it's possible, you know, because the Wells Fargo Index Fund, which was the second one to ever come out in the early 1990s.”
2022-08-26 · Masters in Business · Eric Balchunas on the Vanguard Effect · IDENTIFIED FROM THE TRANSCRIPT · source
“Amongst active funds Over the fullness of time, maybe part of my theory on low cost passive. I don't think it would have happened without Vanguard because that could be.”
2022-08-26 · Masters in Business · Eric Balchunas on the Vanguard Effect · IDENTIFIED FROM THE TRANSCRIPT · source
“Yes, they would. I don't think so. Because if you look at any study, the lowest cost act of funds beat their benchmarks way more. And Vanguard's active funds relative to the...”
2022-08-26 · Masters in Business · Eric Balchunas on the Vanguard Effect · IDENTIFIED FROM THE TRANSCRIPT · source
“Catch hold. And I think it was Vanguard's mutual ownership structure that is the key ingredient, as well as Bogle's unique structure. So most of my book is exploring those two things. I think those two things were created the explosion. And then when they were looking for something to apply this to, indexing was out there. And they said, let's do that. And that, I think, in a weird way, I think indexing got lucky that Vanguard and Bogle existed. So let me push back a little bit on that. Sure. If Vanguard had this, see, I think they're very complimentary, the mutual ownership structure. Of course, hand in glove. Because hypothetically, in the alternative universe, Vanguard never gets into passive and index. Which would destroy though they'd get all the money.”
2022-08-26 · Masters in Business · Eric Balchunas on the Vanguard Effect · IDENTIFIED FROM THE TRANSCRIPT · source
“But it's also Bogle worked hard. If you are going to go to Wall Street and you are going to put in those hours, I think most people want a big payoff. So I'm really going to put this much of myself in there. And intensity, it's fire on the belly thing. It's just the way the story goes on Wall Street. You make a ton of money. Usually there's some fall, you know, where maybe you get into fight with people. The Bill Grove story I thought was probably more traditional Wall Street story. Yes. The rise and the fall, right? It's unusual, though, to have that much work ethic, that much drive, and say, yeah, I want all the investors to have the money. I mean, they got paid well, but he was never going to get Jeff Bezos rich or, you know, the Johnson family rich if he turned over the profits. That decision was the biggest, I think, the single biggest decision in the last 50 years. Indexing is just a lucky byproduct of that decision. If indexing was expensive, it wouldn't really”
2022-08-26 · Masters in Business · Eric Balchunas on the Vanguard Effect · IDENTIFIED FROM THE TRANSCRIPT · source
“So fascinated with was why would someone set up a company where they deliberately turn over all the future profits to the people? It makes no sense. It's Marxist. It's crazy. And I asked everybody, I interviewed 50 people for this book. I asked them all that question. How come nobody has copied Vanguard structure? And the answer was all the same. Well, no incentive. There's no incentive to. And as Jason Sweig said, no one goes through Wall Street to drive a Volvo. Man, can I tell you that is the most 1% thing I've ever heard from you? Because in normal middle class households, of Volvo is considered a higher-end car. Sure. Well, I guess, but it's also very accurate. Man Sure. But I guess”
2022-08-26 · Masters in Business · Eric Balchunas on the Vanguard Effect · IDENTIFIED FROM THE TRANSCRIPT · source
“As markets move and headlines break, what matters most is context. A Bloomberg subscription gives you unmatched reporting, sharp analysis, and powerful tools that help you connect the dots. Visit Bloomberg dot com slash podcast offer to learn more. You wrote this very insightful and what turned out to be influential column in twenty sixteen called The Vanguard Effect. Tell us what is the Vanguard effect. Yeah, so the Vanguard Effect is, you know, Vanguard comes out, they're a mutually owned company, right? The investors, the funds own the company, the investors own the funds. That is really the heart of the matter here. Very different, more akin to an insurance company than a typical co-op almost trader or a nonprofit. They're not exactly those things, but it's something like that. It's unique. And this is part of the story I was.”
2022-08-26 · Masters in Business · Eric Balchunas on the Vanguard Effect · IDENTIFIED FROM THE TRANSCRIPT · source
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2022-08-26 · Masters in Business · Eric Balchunas on the Vanguard Effect · IDENTIFIED FROM THE TRANSCRIPT · source
“I would say the financial crisis of 2008 is when they really kicked in. But up until then, they had less than a trillion, I believe. And, you know, they were always out there. I remember when I covered for fund action in the 90s, in the late 90s, I would cover all the fun companies. I looked at Vanguard as maybe the fourth or fifth company. I was like, Fidelity got to cover Fidelity, T-Row, Leg Mason. Vanguard was like fourth or fifth. Now, when I think of the universe, it's like Vanguard, BlackRock, and then you can eat binoculars to see somebody else. Right. That's amazing. And appreciate the Hemingway reference. That's always really interesting. This message is brought to you by AppleCard. Sometimes life's journeys take you on the roads less traveled. That's why Apple created the titanium apple card to use anywhere in the world where MasterCard is accepted. Plus with Apple Card, you can earn unlimited daily cashback on every purchase every day.”
2022-08-26 · Masters in Business · Eric Balchunas on the Vanguard Effect · IDENTIFIED FROM THE TRANSCRIPT · source
“Limited success, but mostly being looked at as that Jack Bogle guy in Pennsylvania, what is this stuff? He's just hitting his head against the wall. That is just going nowhere. Could you picture decades of this with just moderate, at best, acceptance to the whole idea? Yeah, I mean, this is part of the story. I couldn't believe the numbers. Here's two examples of how long it took. took Vanguard 25 years to get 10% market share in funds. 97, 98% of Vanguard's assets came after Jack Bogle stepped on as CEO. Amazing. That's amazing, right? So he built a foundation, largely in oblivion, right? Yeah. But once it got built, then it became the gradually then suddenly thing. But he toiled around a long time. Although he was a very loud, prominent voice, but the assets really weren't there until...”
2022-08-26 · Masters in Business · Eric Balchunas on the Vanguard Effect · IDENTIFIED FROM THE TRANSCRIPT · source
“And then someone at a higher level would be told by somebody ETFs are big. And get you some functions, but it was always on the terminal. But once you do that, that's just the frost thing on the cake. You click on an ETF, then you got to look at the holdings. Then you want to analyze one stock. You click on that. You could just keep clicking on a terminal. Other services you're clicking had to stop somewhere. So I'm like, all the stuff they did here in the 80s and 90s to connect to the exchanges, to get all the stocks and the bonds, when the ETF came out, all we had to do was put some like, you know, sort of frost thing on the cake. But now your analysis could go anywhere. And so the terminal and the infrastructure there was really a huge tailwind for my efforts. So let me ask you a question that'll tee up the rest of our conversation. You started in the TF space in the mid-2000s and, you know, following the financial crisis, they exploded. Imagine just banging away at this for 40 years with some.”
2022-08-26 · Masters in Business · Eric Balchunas on the Vanguard Effect · IDENTIFIED FROM THE TRANSCRIPT · source
“Mutual funds. Yeah, I tried all kinds of ways, which is sort of, I could relate to Bogle trying to sell index funds in the 70s and 80s when no one was really interested. I think everybody has these plates in their life where they're trying to tell people about something, and it just takes a long time to break through. So I would basically use my communication skills. I would talk to people internally. I would go to sales meetings. I would present the chart I really like to show was people think of ETFs at the time of having, say, like 2% market share of all funds, but I'm like, but they make up 20% of all equity trading. So I would show them the volume and be like, and we're a service that does a lot with trading, we should have 20% of the equity programmers, if you think about it. Sure. People would nod their heads, but I would never get 20% of the equity programmers. But over time, we made some headway. We started doing events. And honestly, I just really was like a one-man army for a little while. But then the assets started to come in.”
2022-08-26 · Masters in Business · Eric Balchunas on the Vanguard Effect · IDENTIFIED FROM THE TRANSCRIPT · source
“Had no idea that this was the ETF mafia, and these were the people running, really driving the mindshare and the perception of ETFs, both in the industry and amongst the investment community. And I'm like, oh, what are you guys do? Kind of, we're hanging out and having some fun. And it's like, yeah, we mess around with ETFs. Oh, we own ETFs. We can hang with you, not realizing, oh, no, no, you don't understand who these got Jim and go down the list of people. These are the folks that really drove the entire expansion of the ETF industry quietly in the 90s. But as you mentioned, in the 2000s, it was just starting to ramp up. So how did you drive this company into putting a greater emphasis on ETFs and treating them as distinct from...”
2022-08-26 · Masters in Business · Eric Balchunas on the Vanguard Effect · IDENTIFIED FROM THE TRANSCRIPT · source
“In 2006-7, I was like, oh my God, I was like kicking the tires on ETFs. And I'm like, these things are going to take over. They're too good. The value is too strong. So I just was like became, I'm like, dove headfirst into ETFs. And I went to index universe conferences, started listening to their podcast with your friend Dave Nadig, Matt Hogan. And I looked at some of the stuff how they talked, the data they looked at. And it was very inspirational. I said, we have to cover things like index weighting methodology, the criteria, the rebalancing. There's all these ETF specific fields we have to get on. So part of what I did was to make the DES page one for ETFs that had all of fields that were prevalent for ETFs because the time they were putting ETFs into mutual funds and they're you were a driver you help separate it and that's why people think of you as the ETF guy by the way the folks you mentioned I group you in with them because when I befriended folks like David Nodig I”
2022-08-26 · Masters in Business · Eric Balchunas on the Vanguard Effect · IDENTIFIED FROM THE TRANSCRIPT · source
“And I was like, I had heard of him, but I, you know, was still. And let me just jump in so the spiders had been around at that point in time. The S&P 500 spiders by State Street. They had been around since 93. Yeah, a couple of decades. And other companies had moved into the space. And I just was having this conversation with some of the other day. They said, who you're interviewing? Oh, Eric Valchunis. Oh, and the question they asked was, was Bloomberg late to ETFs? I'm like, I thought they were there pre-financial crisis. They were fairly, they weren't the first one, but they certainly didn't lag. It's a great question. So Bloomberg covers everything. And if a ticker is on the exchange, it's on the terminal. So we had ETFs from day one. Right. But did we care about them? Did we put a lot of resources into them? Not really. They were still small back then. And I think that's maybe part of my legacy if there is one here is to.”
2022-08-26 · Masters in Business · Eric Balchunas on the Vanguard Effect · IDENTIFIED FROM THE TRANSCRIPT · source
“That I still think I'm the first person ever in the history of this company to go from PR to data. That's all they do in Princeton is data and engineering. But I was like, well, I don't want to commute to New York every day from South Jersey, so I'll take a job here. So they looked at my background and said, why don't you go work for funds data? So I got to work where they make the terminal. It's like the Kiebler Elves. So I've seen how the terminal is made, where all the data comes from. I basically had to work on getting fund information from the prospectuses before technology was really that great, put them into fields. This was a manual process. Yes. We automated it as we went. We were always looking to automate. And so when you pull up a Bloomberg and you type in like the Fidelity Magellan fund and then you type DES, all that information there is really what we did. And so I was doing that in 2000, 2002, three, four. And in 2006, I got a hand at ETFs. They're like, you work on ETFs now.”
2022-08-26 · Masters in Business · Eric Balchunas on the Vanguard Effect · IDENTIFIED FROM THE TRANSCRIPT · source
“Supposed to be in the top windows of the world that day. Really? Yeah. By the way, there are thousands of stories. I know, and I'm not looking, sometimes people overindulge themselves in these stories. But fate did intervene, but there is a badge. There was a conference up there, Waters Technology had a badge with your name on it. There's a badge with my name on it that was at the top. Isn't that crazy? What time did the event start? Oh, it started at like seven in the morning. Oh, so you absolutely would have been there. Yeah, there were three people from this company who were there. No kidding. Yeah, sad. And one of them is actually my friend from South Jersey knows him and they still have, I think, a walk for him every year. It really hit home, but I also was looking to take a step. Like, I was looking to change gears in life anyway. I was about 27. So I moved back to South Jersey and I transferred to the Princeton office of Bloomberg. And when you do...”
2022-08-26 · Masters in Business · Eric Balchunas on the Vanguard Effect · IDENTIFIED FROM THE TRANSCRIPT · source