YouSaid · the spoken record

Greg Davis

lines on the record: 73
first: 2023-08-25
most recent: 2023-08-25
sittings or episodes: 1
sources: podcast

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“I would say the power of compounding is such a beautiful thing. I just wish I would have learned that lesson earlier on. And what we were speaking about before, the idea of investing versus speculating. As a youngster, it's always interesting to you, you think about an industry or a company and you're like, oh, it'd be a great investment. But what you're doing is speculating and you should be investing and let that investment compound over 30, 40, 50 years. And you can see that even small amounts of money will grow into rather large sum if you do it on a consistent basis. So I wish I would have learned those lessons earlier in my life.”
2023-08-25 · Masters in Business · Greg Davis on Vanguard Portfolio Management · IDENTIFIED FROM THE TRANSCRIPT · source
“I would say a couple things. One is be a continual learner, master your craft, so spend the time and energy and the effort to learn and become an expert. And the key thing is continuous learning. And there's opportunities to learn from everybody”
2023-08-25 · Masters in Business · Greg Davis on Vanguard Portfolio Management · IDENTIFIED FROM THE TRANSCRIPT · source
“Some of those ramifications in today's modern age. So I thought it was a really, really interesting book about American history.”
2023-08-25 · Masters in Business · Greg Davis on Vanguard Portfolio Management · IDENTIFIED FROM THE TRANSCRIPT · source
“Right now, I'm reading Plunder by Brendan Balou. It talks about the private equity, the private equity world. I have a daughter who wants to do private equity investing. So I'm doing some due diligence. And the book is actually an interesting read, but it talks a bit about the dark side of private equity versus some of the favorable things that come out of that space as well. And then there was another book that I read, you know, previously that I thought was really interesting. It's non-market related, but it talks a lot about history in the US. It's called From Here to Equality by William Darty and Kirsten Mullen. And it really examines a lot of American history that isn't covered in school. It's a deep look at some of the, you know, really pivotal points in the nation's history that, you know, where we had a number of opportunities to create a more equal and just society where we chose to go left instead or right. And we're still dealing with.”
2023-08-25 · Masters in Business · Greg Davis on Vanguard Portfolio Management · IDENTIFIED FROM THE TRANSCRIPT · source
“And then along the way, Ken Vulpert, who hired me, huge, huge mentor. He hired me to trade treasuries and mortgages on the team, big mentor advocate sponsoring Friend, and of course, Tim Buckley, who put me, who gave me the opportunity to go to Australia and then ultimately lead the fixed income group and then put me in the seat that I'm in today. I've only had two bosses at Vanguard in 24 years, and they've both been phenomenal.”
2023-08-25 · Masters in Business · Greg Davis on Vanguard Portfolio Management · IDENTIFIED FROM THE TRANSCRIPT · source
“I had a number, and I'll go back to the first two I had when I started in this industry, Daryl Thomas was leading investment grade capital market at Citibank. He actually helped me help me get my internship. I met him at a career fair. He helped me get my first internship on Wall Street with somebody I kept in contact with over the years. And he helped me, you know, him and it was another individual, Carminer Cilio, who also worked at City at the time. Those two individuals gave me a lot of perspective when I was thinking about moving from Wall Street to the buy side. And thanks to some of the words of wisdom from Carmine, you know, he said to me when I was thinking about making a change, he said, if you could join a well-regarded, well-respected asset manager, you're going to have a much longer and more fruitful career than if you stay on the sell side. And that was advice he gave me back in 1999.”
2023-08-25 · Masters in Business · Greg Davis on Vanguard Portfolio Management · IDENTIFIED FROM THE TRANSCRIPT · source
“First episode, I saw it. It was very fun. It was a really interesting show. So that's one. And then because of my kids also been big fans of All American and Bel Air, which are also a really cool series that we've been watching. So those were a couple.”
2023-08-25 · Masters in Business · Greg Davis on Vanguard Portfolio Management · IDENTIFIED FROM THE TRANSCRIPT · source
“So, from a streaming standpoint, there was a series went through the first season that ended. They're going to start a new one in 2024. It was called Night Agent. Night Agent. Yeah, which was really interesting. There was an FBI agent who was manning a telephone in the basement of the White House. It was actually a really good series. And the good news is it got picked up. And I think they're coming out with new episodes in 2024. But it was a really, really interesting.”
2023-08-25 · Masters in Business · Greg Davis on Vanguard Portfolio Management · IDENTIFIED FROM THE TRANSCRIPT · source
“So, you know, that would interesting. And I love the experience of living over in Germany. And I had the benefit as a kid during my teenage years going back to visit family members and friends over the years, going back to Germany, which is also a very rewarding and memorable part of my childhood.”
2023-08-25 · Masters in Business · Greg Davis on Vanguard Portfolio Management · IDENTIFIED FROM THE TRANSCRIPT · source
“It was a phenomenal, phenomenal experience. I mean, I had the privilege of growing up in a bilingual household. And my maternal grandmother was also home, and she spoke primarily, primarily German to me. So what was challenging for me was like, actually, when we moved to the US when I was seven years old, I was always good with math, but my English was below average. And my wife is an English. She taught English at the college level. She said, you dummy, English was a second language for you, and it really was. I didn't know it even I went to a U.S. Department of Defense school in Germany. But my primary language that was spoken by my grandmother, who I spent most of my time with, was German.”
2023-08-25 · Masters in Business · Greg Davis on Vanguard Portfolio Management · IDENTIFIED FROM THE TRANSCRIPT · source
“But again, we have to remember we can't be blindsided by the fact that inflation has been well above their target because of all this stimulus, but this stimulus was slowly ebbing out of the system. And we're gradually going back to, if we're going in the right direction, the question is, how long will it take for us to get there?”
2023-08-25 · Masters in Business · Greg Davis on Vanguard Portfolio Management · IDENTIFIED FROM THE TRANSCRIPT · source
“We finally got it You do have to slow down, but the reality is that stimulus is starting to wear off. Those savings are starting to be consumed. You're starting to see the Fed reduce its balance sheet slowly, but it's starting to happen. And you've seen the Federal Reserve clearly raise interest rates dramatically 525 basis points in 15 months that they're definitely trying to slow the economy down. And so we'll have to wait and see if that's enough.”
2023-08-25 · Masters in Business · Greg Davis on Vanguard Portfolio Management · IDENTIFIED FROM THE TRANSCRIPT · source
“Well, the thing is, it's supposed to be a long term target and it's supposed to be an average target over time. So, you know, I haven't heard anything that would say that they're in the process of deciding to switch it to a higher number. I think that's something to be debated once you get back to close to your target. And that gives you greater credibility over time, which you don't want to do is you don't want to change. You don't want to change the milepost while the car is still in motion and you're running the race. You want to basically say,”
2023-08-25 · Masters in Business · Greg Davis on Vanguard Portfolio Management · IDENTIFIED FROM THE TRANSCRIPT · source
“But we have to be realistic, too, right, Barry. I mean, the reality is for 10 years, we couldn't hit 2% inflation. We were on the underside, right? We were underneath that 2%. They were working really hard to try to get the 2% and they couldn't achieve it.”
2023-08-25 · Masters in Business · Greg Davis on Vanguard Portfolio Management · IDENTIFIED FROM THE TRANSCRIPT · source
“Well, that's what the market is gravitating towards. That is what the Fed is operating off of. And until they decide to communicate a different message, that's what the market is going to continue to follow, right? And their behavior says that, hey, they want to see inflation coming down. It's also difficult. It's also difficult to be changing the strategy when you're falling behind your current strategy. Because if you say, hey, I'm going from a 2% target to 3%, well, you're at 3% because you couldn't hit 2%. Well, is 3% the right number? And so, well,”
2023-08-25 · Masters in Business · Greg Davis on Vanguard Portfolio Management · IDENTIFIED FROM THE TRANSCRIPT · source
“I think you have to get to a place where you feel like the Fed is done and inflation is starting to be, you know, you're convinced that inflation is under control and path towards the Fed's 2% target. So we think there's still some ways for that to go. And again, if you go back to what I was saying earlier about RSTAR and the neutral Fed funds rate, if we believe that's three and a half percent with a normal shaped yield curve at four and a half, we're not far from that. But it's also that's far from neutral, right? If we think four and a half percent is fair value, like we're not at fair value yet. So that means it also means that, hey, it's not cheap. So you don't want to dive in with both feet when you're approaching fair value. You want things to actually be cheap before you do that. So the risk is that rates back up more. So I think you still want to be somewhat conservative when it comes to duration positioning in a portfolio.”
2023-08-25 · Masters in Business · Greg Davis on Vanguard Portfolio Management · IDENTIFIED FROM THE TRANSCRIPT · source
“I mean, you just have to look at history, but some people have to learn the hard way using real money to do that. But eventually most people find religion and start thinking about, hey, how do I actually construct a portfolio that's durable, that would provide the type of economic return that's required to meet their retirement needs, college saving needs, or buying that new house or whatever the case may be?”
2023-08-25 · Masters in Business · Greg Davis on Vanguard Portfolio Management · IDENTIFIED FROM THE TRANSCRIPT · source
“Having cash flow, having earnings matters in the long run. And, you know, sometimes people have to learn a hard, hard lesson that, again, that's not investing. And that's really speculative. It's a lesson to learn early on in your career. When you don't have a lot of money versus later on in your career where you start to accumulate some assets, you definitely want to be more of an investor versus a speculator.”
2023-08-25 · Masters in Business · Greg Davis on Vanguard Portfolio Management · IDENTIFIED FROM THE TRANSCRIPT · source
“That's exactly right, Barry. I mean, I've been in this industry long enough. I started my career in finance in 1998 and very familiar with the dot-com era and what happened there. And it was very, very reminiscent of that period of time where during that period, anything with a dot-com behind it, you know, ran to the moon and you couldn't go wrong. Well, that works until it doesn't. And then one day you realized that these companies actually, they have to be real companies that make money, produce earnings, and are viable businesses. And, you know, in a speculative fever, people lose sight that, you know,”
2023-08-25 · Masters in Business · Greg Davis on Vanguard Portfolio Management · IDENTIFIED FROM THE TRANSCRIPT · source
“Yeah, but it is. It is very, I mean, the data will show that it is not fruitful. It is not helpful to long-term investors to engage in that type of activity. But we don't have to look too far past with the meme stocks and things of that nature where variety of reasons things pop on the headline and there's a lot of momentum and folks getting involved and people get caught up and believe it's easy money and it's free money. And the reality is that speculation and not investing. And so speculating is, you know, that's a very risky strategy. And when we think about investing, that's not the way you construct an investment portfolio. If you want to do that from a speculative standpoint, that's fine. Do that with a very small portion of your portfolio, but the majority of it should be investing in long-term strategies that will add value and are enduring.”
2023-08-25 · Masters in Business · Greg Davis on Vanguard Portfolio Management · IDENTIFIED FROM THE TRANSCRIPT · source
“Cognizant you are to the cost that you're paying for the funds that you're investing in and doing that in a highly diversified low cost way we think is going to provide investors the best chance for their investment success long term versus focusing on you know daily news announcements what's happening those are the types of things that create trading activity but don't tend to add value for long term investors”
2023-08-25 · Masters in Business · Greg Davis on Vanguard Portfolio Management · IDENTIFIED FROM THE TRANSCRIPT · source
“We try not to be in the short term forecasting game. And forecasting is really hard. And it's even harder to the extent you're doing it for the short term. And so, you know, when we think about the Vanguard Capital Markets motto, which drives a lot of our advice engines and the recommendations that we provide to client, they're truly not point forecast in the narrow sense of how people tend to do forecast. It's really the median results of a large simulation that shows a probabilistic determination of results. And it runs a scale. And the median is just basically that midpoint of all those observations. And so we have a distribution around that. And so again, there's going to be periods of time when you're in the tail, both positively and negatively. But again, what we try to say to our clients, you have no control about how volatile the market's going to be, what you can control at the end of the day is how diversified you are.”
2023-08-25 · Masters in Business · Greg Davis on Vanguard Portfolio Management · IDENTIFIED FROM THE TRANSCRIPT · source
“And so, but it all depends on what happens from an inflation perspective, economic growth perspective, and how aggressive the Fed will have to be, you know, going down a path here. But again, we think that there is some risk that rates will have to go a bit higher here, just given everything that's going on in the economy and the marketplace.”
2023-08-25 · Masters in Business · Greg Davis on Vanguard Portfolio Management · IDENTIFIED FROM THE TRANSCRIPT · source
“Bills and 10 year bonds of about 100 basis points, you know, that brings you to a 10 year that's probably fair around four and a half percent.”
2023-08-25 · Masters in Business · Greg Davis on Vanguard Portfolio Management · IDENTIFIED FROM THE TRANSCRIPT · source
“That's exactly it. So people think that that's the end. I think what you have to look at, and our team has done work on this, you have to look at what do you think is the appropriate level for Fed funds in the neutral state where it's not stimulative or contracting the marketplace. And so some of the research our team has done, it says that, look, long-term Fed funds could be higher than what the market is pricing in. The market and the Fed have said, you know, probably neighborhood, our stars, you know, 50 basis points or half a percent. You had 2% inflation on top of that that gives you a long-term Fed funds of 2.5%. You know, our investment strategy group through their analysis, they estimate that RSTA is probably closer to 1.5%. So that brings you to a longer-term Fed funds target of closer to three and a half if they're successful at bringing rates back down to two, inflation back down to two, I should say. And then if you build a normal term structure on top of that between three month treasury.”
2023-08-25 · Masters in Business · Greg Davis on Vanguard Portfolio Management · IDENTIFIED FROM THE TRANSCRIPT · source
“Yeah, I think a lot of investors end up succumbing to recency bias, right? So the fact that we've been in an environment where interest rates”
2023-08-25 · Masters in Business · Greg Davis on Vanguard Portfolio Management · IDENTIFIED FROM THE TRANSCRIPT · source
“Knows when you could see that kind of return to normal. But you would definitely expect that higher interest rates will put continued pressure on the equity market and get valuations back to something that's more normalized over time because you do expect if you're investing in equities to earn an equity risk premium. And the fact that it's so much lower than what we've seen historically, it starts to beg the question, how much exposure if I'm a shorter-term investor, how much exposure do I want in that space? For long-term investors, it doesn't matter.”
2023-08-25 · Masters in Business · Greg Davis on Vanguard Portfolio Management · IDENTIFIED FROM THE TRANSCRIPT · source
“I think there's a couple of things. One, it becomes a factor. Yeah, the economy can clearly keep roaring along, which we've seen. You know, the fiscal stimulus that we've seen, you know, there's over $2 trillion that was saved. You know, our reports show and some of the data out in the marketplace shows that about a trillion dollars of that has already been spent down. So investors and savers are definitely eating into that safety net, which over time, as that continues to decline, should slow the economy down to some degree. So I think that's going to be a big factor. But then, you know, when you think about, you know, the broader equity markets, again, the biggest thing that would be concerning if you start seeing a continued rise in interest rates and that has to put pressure on equity valuations. I mean, equities are an ultra-long duration asset. And if you're discounting those future cash flows at higher interest rates, that means you get a lower present value. And at some point, that will bite. Who knows when that's going to be?”
2023-08-25 · Masters in Business · Greg Davis on Vanguard Portfolio Management · IDENTIFIED FROM THE TRANSCRIPT · source
“That's exactly it. And a lot of we would say a lot of that's probably already baked into the marketplace and has run its course. Could it go further? Of course it could. But at some point, there is a tipping point where people start saying, well, in the US, I have alternatives. I have alternatives because I can go out and buy a money market, fund at 5.5%, and I don't have to take a lot of risk. And, you know, if, again, based on our forecast for U.S. equity markets, they're somewhat muted because valuations are stretched in our view relative to our fair value model. And so I think a lot of investors have alternatives. They can buy money markets. They can buy bond funds where there was no alternative for the last 10 years because we didn't get any real yield when it came to the fixed income of the money market space. But there's really alternatives today for investors, either in fixed income, money markets, or international stock.”
2023-08-25 · Masters in Business · Greg Davis on Vanguard Portfolio Management · IDENTIFIED FROM THE TRANSCRIPT · source
“Well, I think there's a couple things there, Barry. I mean, one of it is, do you expect the earnings growth to live up to the expectations that are already priced into the U.S. market? And if so, that's fine for where we are, but that's not necessarily going to lead to multiple expansion, right? And a big driver of the outperformance over the last decade of U.S. stock relative to the international's valuation expansion.”
2023-08-25 · Masters in Business · Greg Davis on Vanguard Portfolio Management · IDENTIFIED FROM THE TRANSCRIPT · source
“There's a substantial difference. Now, there are sector differences. And we could talk about that to some degree as well. But the reality is even if you adjust for sector differences, there's still a big gap. There's still a big gap in terms of the PE ratios across the US market relative to the rest of the world. And so unless we expect earnings for U.S. companies to vastly outpace what's happening in the international markets, and it might, but there's a lot of great news already priced into the marketplace. And when you think about translating the S&P 500 PE to a, you know, an implied equity risk premium by looking at the 10-year treasury yield, you're 200 basis points below what it's been for the last 10 years.”
2023-08-25 · Masters in Business · Greg Davis on Vanguard Portfolio Management · IDENTIFIED FROM THE TRANSCRIPT · source
“700 basis points of outperformance by the US market relative to the international markets. So if you were to take a look at where PE ratios are today between the S&P, which has an earnings yield of about 5%, and you look at the FTSE global all cap XUS, it has an earnings yield of 8.3%, right? And so...”
2023-08-25 · Masters in Business · Greg Davis on Vanguard Portfolio Management · IDENTIFIED FROM THE TRANSCRIPT · source
“Yeah, so I mean, if you were to take a look at what's happened over the last 10 years, looking at the S&P 500 index versus the FTSE global all-cap XUS, there was a 7 percentage point difference per year by being 700%.”
2023-08-25 · Masters in Business · Greg Davis on Vanguard Portfolio Management · IDENTIFIED FROM THE TRANSCRIPT · source
“Well, you know, I think if you look at what our return expectations are for the global balance portfolio, we're expecting that over the next decade or so, somewhere in the neighborhood of about 5.5% for a global balance portfolio. So combination of equities, bonds, US and international stocks. And the reality is our return expectations for the U.S. equity market is a bit more muted. We're expecting U.S. equity market returns to hover somewhere around 5% or so where international equity is because of valuations, probably seven to seven and a half percent.”
2023-08-25 · Masters in Business · Greg Davis on Vanguard Portfolio Management · IDENTIFIED FROM THE TRANSCRIPT · source
“We definitely saw a number of clients who started embracing money markets. And the reality is for a lot of investors, it truly is free money, right? So when you think about what people are earning in their deposit accounts at their banks, and banks have historically been very slow to very slow in terms of raising deposit rates because those deposits tend to be very sticky. And I've had people stop me even at Vanguard in the hallway and say, wow, I didn't realize that I've been leaving this much money on the table by keeping a sizable amount of deposits at my bank. I moved it to a money market. Now I'm getting five and a quarter percent type yield, which is amazing when some folks are still getting less than half a percent in many cases in the bank.”
2023-08-25 · Masters in Business · Greg Davis on Vanguard Portfolio Management · IDENTIFIED FROM THE TRANSCRIPT · source
“It for 10 years. Now's not the time when you're back to an environment where you're actually getting a real yield when it comes to the bond market.”
2023-08-25 · Masters in Business · Greg Davis on Vanguard Portfolio Management · IDENTIFIED FROM THE TRANSCRIPT · source
“Look, clearly the equity market's been on a tremendous tear so far this year up 18, 19% year to date. But the key thing there is like, again, investors have to keep in mind that that's probably not sustainable long term. And so, again, the importance of having a diversified portfolio is critically important. And just think about, you know, fixed income and money markets as an asset class. For a decade, you weren't earning anything in a money market fund because interest rates by the Federal Reserve were pegged to zero. And you had to take on significant duration risk and credit risk just to earn a couple percentage points. And now you're in an environment where money market funds are yielding five and a quarter percent. You have, you know, the US ag that's yielding somewhere close to 5%. So four and a half percent. So in the grand scheme of things, investors are actually being rewarded for having exposure to money markets and bond funds. And so, you know, if people are truly concerned about a 60-40 portfolio, they should have been concerned about.”
2023-08-25 · Masters in Business · Greg Davis on Vanguard Portfolio Management · IDENTIFIED FROM THE TRANSCRIPT · source
“Because, you know, again, it provides you diversification, it reduces some of the volatility, but there will be periods of time where, again, that type of portfolio when we were in an environment where interest rates were held down to historically low levels. So when they reprice, it's not surprising that you see losses on the bond side of the equation. But if you go back to the period before 2022, from 2019 to 2021, a 60-40 portfolio actually produced 14% returns over that time horizon, which is above the long-term average. So, you know, in a grand scheme of things, it's not surprising that there's periods of outperformance, and that ultimately will lead to periods of underperformance.”
2023-08-25 · Masters in Business · Greg Davis on Vanguard Portfolio Management · IDENTIFIED FROM THE TRANSCRIPT · source
“Somewhere in that type of horizon. Yeah, exactly. So it's not something that many investors have been accustomed to or have seen in their lifetimes. But the reality is when you think about the components in the terms of long-term investing, the bond portion of the equation provides that balance and diversification. Now, again, in any one given year, you will have a 40-40%.”
2023-08-25 · Masters in Business · Greg Davis on Vanguard Portfolio Management · IDENTIFIED FROM THE TRANSCRIPT · source
“It's interesting. I mean, we've heard that over and over again. It was a tough year for investors in terms of both stocks and bonds being down where stocks were down about 20%. The US ag was down 13%.”
2023-08-25 · Masters in Business · Greg Davis on Vanguard Portfolio Management · IDENTIFIED FROM THE TRANSCRIPT · source
“That's exactly it. That's exactly it. And when you saw the U.S. ag down 13% last year, for folks, again, who are investing for retirement and in their 529 plans, they're not concerned about it. But when you translate that to folks who might have a heavy municipal bond portfolio, right? And those folks who are in retirement and they don't like principal losses. They like tax-free income, but they also don't like principal losses. So when you have a big backup like that, you tend to see outflows in that segment of the market more than you would see in the taxable market, which tends to be in our case more long-term, retirement oriented, and things of that nature. So you will see some pressure on munis in those types of interest rate environments.”
2023-08-25 · Masters in Business · Greg Davis on Vanguard Portfolio Management · IDENTIFIED FROM THE TRANSCRIPT · source
“You know, it's interesting. I mean, there's certain segments of the market that did quite well, certain segments of the business, but you also have a period of time when there's repricing that happens in the fixed income space like we saw, and it was pretty rapid last year, right? And you have”
2023-08-25 · Masters in Business · Greg Davis on Vanguard Portfolio Management · IDENTIFIED FROM THE TRANSCRIPT · source
“Well, you know, it's a great point, Barry, but the reality is when you're running portfolios in a highly risk-controlled way, you're trying to manage the downside, right? So when you have three years, you have three years, again, because you're trying to make sure people have an opportunity for their strategies to play out over time, but you're also making sure that you're constraining the risk that even if you do have a bad year, it's not going to be, it's not going to be so bad that investors start running for the hills. Again, we want investors to stay in these products long term because we think they provide good long-term enduring value for our clients.”
2023-08-25 · Masters in Business · Greg Davis on Vanguard Portfolio Management · IDENTIFIED FROM THE TRANSCRIPT · source
“That's amazing. So, when we think about how those teams are evaluated, it's a three year number. So, how did you perform? Because in any given quarter, any given year, you could have winners and losers in terms of strategies. But what you're trying to do is you're trying to string good periods together. And over a three-year period, we feel like there's enough opportunities for teams if they're good at what they do to add value. And that's what we've been able to demonstrate over time.”
2023-08-25 · Masters in Business · Greg Davis on Vanguard Portfolio Management · IDENTIFIED FROM THE TRANSCRIPT · source
“That's right Yeah, I mean, for our teams, our active teams, their performance is valued on a three year basis. So, you know, three.”
2023-08-25 · Masters in Business · Greg Davis on Vanguard Portfolio Management · IDENTIFIED FROM THE TRANSCRIPT · source
“You don't need to sit there and try to overcome a heavy expense ratio all the time. We can be patient. We can wait. We can wait till the market's a bit more attractive. And when we feel we're being rewarded for risk-taking.”
2023-08-25 · Masters in Business · Greg Davis on Vanguard Portfolio Management · IDENTIFIED FROM THE TRANSCRIPT · source
“You get your money back. You get your coupon payments and your principal at maturity on time. The downside is you get zero because the company files for bankruptcy and there's no recovery value. So again, for a defensive asset class, we've always thought that you want to limit the amount of risk that you take in what's supposed to be balancing the portfolio. And the way we're able to accomplish that is that because we have so much scale and ability to keep costs low at Vanguard, At the end of the day our active fixed income managers don't need to take the same level of risk as some of our competitors simply because they don't have the same level of headwind. Our expense ratios are lower. So when things don't look attractively priced in the marketplace.”
2023-08-25 · Masters in Business · Greg Davis on Vanguard Portfolio Management · IDENTIFIED FROM THE TRANSCRIPT · source
“Yeah, I mean, in fixed income, because again, it tends to be a defensive asset class. What you want to do is you want to try to avoid the losers, right? Where, you know, what's the upside when you invest in a bond?”
2023-08-25 · Masters in Business · Greg Davis on Vanguard Portfolio Management · IDENTIFIED FROM THE TRANSCRIPT · source
“On a three year basis against their benchmarks, and then if you look at a five year time horizon, it's 77%. So, you know, our active team has been successful outperforming their benchmarks. And a big part of it is, do you have the credit team that can do to due diligence? Because credit is where we think we can add the most value by credit research. And we see that on the municipal bond side as well, where we have a very active municipal bond franchise. And the credit research allows that team to consistently add value relative to the benchmarks providing better outcomes for our clients long term.”
2023-08-25 · Masters in Business · Greg Davis on Vanguard Portfolio Management · IDENTIFIED FROM THE TRANSCRIPT · source
“So, on the bond side, we have both. So, you know, we do bond indexing in a highly diversified way, cutting across segments, including treasuries, including governments, corporates, mortgages and things of that nature, global portfolios that give you a tremendous amount of diversification that's hedged back to the US dollar, which in a highly diversified way is a great way to get bond exposure. To your point in terms of active fixed income, we do have a very large active fixed income team where that team has been very successful in terms of being able to add value over the long term. And so when you look at some of the results and a big chunk of that comes from our credit research capabilities within the team, both investment grade, emerging market, as well as high yield, but 92% of our active bond funds have done better than the average fund over their Lipper group averages over a five-year period. And 87% of our active fixed income funds have outperformed their benchmarks.”
2023-08-25 · Masters in Business · Greg Davis on Vanguard Portfolio Management · IDENTIFIED FROM THE TRANSCRIPT · source