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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“Yeah, exactly. So when there's major turnover like that that happens, you always have the option, hey, can you do it exactly on the time that it enters the benchmark? Do you need to do some of it ahead of time? Do you need to do some of it afterwards to try to smooth out the process? And that's a risk decision that you have to make. How much liquidity is going to be there when there's a major activity that happens? Is the pricing more attractive right away versus waiting until it starts trading in the secondary market? Those are the considerations and the conversations that we have with our risk team and our senior investment professionals on the equity side.”
2023-08-25 · Masters in Business · Greg Davis on Vanguard Portfolio Management · IDENTIFIED FROM THE TRANSCRIPT · source
“Business. A big part of it is really around when there's more complicated corporate actions that are happening that entail a level of risk. There's conversations that happen with our risk management department to make sure we're comfortable in terms of what kind of exposure that creates in the fund.”
2023-08-25 · Masters in Business · Greg Davis on Vanguard Portfolio Management · IDENTIFIED FROM THE TRANSCRIPT · source
“Yeah, the main thing, Barry, it's a great question. The main thing goes back to what's the enduring philosophy? What are we trying to accomplish for our clients? And, you know, at the end of the day, they come to us to try to get long-term exposure to a segment of the market. We want to do that in the best possible way, making sure they're getting the market return, you know, minus the expense ratio, which again, we will try to offset with security lending revenue and thoughtful rebalancing strategies. But at the end of the day, it's really boils down to broad-based exposure in a low-cost diversified way for our clients, which we think will ultimately serve them really well as they're constructing their portfolios.”
2023-08-25 · Masters in Business · Greg Davis on Vanguard Portfolio Management · IDENTIFIED FROM THE TRANSCRIPT · source
“Or look. Or long lasting, I'm looking forward. Yeah. You know, again, these need to have enduring long term investment merit. That's one of the key defining principles before we launch a fund is there real value long-term for this type of investment strategy? And you're absolutely right. Vanguard is not the type of firm that will launch thematic products that are focused on whether or not it's AI, water, whatever. That's just not what Vanguard does. We're looking for long-term, enduring investment solutions and products that will be provide our investors with long-term opportunity that will serve them really well.”
2023-08-25 · Masters in Business · Greg Davis on Vanguard Portfolio Management · IDENTIFIED FROM THE TRANSCRIPT · source
“We tend not to create the index, you know, that's an outsourced process. So, you know, it's really function of do we have gaps in our lineup? And so we get input from the various business divisions, whether or not it's our retail group, our institutional group, or financial advisor services group. Are there gaps where we feel like, hey, we don't have a relevant offering that's needed by our clients? And then we find out, we do research. The portfolio review department does the research to figure out who would be the best and most well equipped index provider for that type of mandate. And then our team works very closely with them in terms of the due diligence process and making sure that that index is constructed in a way that we're comfortable and the right levels of controls are in place. And then once that's set up, the team is ready to go to start managing against that newly defined index.”
2023-08-25 · Masters in Business · Greg Davis on Vanguard Portfolio Management · IDENTIFIED FROM THE TRANSCRIPT · source
“Revenue net of the cost to run that group goes right back to the fund. So our shareholders benefit whenever there's a lot of demand for certain securities that we own. So that's another contributing factor to the performance in those funds as well.”
2023-08-25 · Masters in Business · Greg Davis on Vanguard Portfolio Management · IDENTIFIED FROM THE TRANSCRIPT · source
“So for total stock market, the total stock market index fund, that is a CRISP fund that is run by the University of Chicago. They create the benchmark. We help them in terms of identifying and creating the parameters around how that index should be constructed. The biggest things are primarily when there's corporate actions, there's IPOs, those are the things that typically drive changes. Because again, this represents the total market. So you have small cap, mid-cap, large cap. You have growth, value, and blend in there. So the turnover is primarily driven by corporate actions and IPOs. And then, you know, the team spends a lot of time just making sure they handle those really, really well to minimize costs, make sure that tracking error remains relatively tight. And the other thing the team does, and we have a securities lending team, that also spends a lot of time making sure that we're getting value for the securities that are in demand. And those earnings from the securities lending.”
2023-08-25 · Masters in Business · Greg Davis on Vanguard Portfolio Management · IDENTIFIED FROM THE TRANSCRIPT · source
“Are dedicated to doing indexing. A lot of firms you find folks who start with indexing and move on to something else. At Vanguard, this is a career destination for a lot of these folks and they love every minute of what they do.”
2023-08-25 · Masters in Business · Greg Davis on Vanguard Portfolio Management · IDENTIFIED FROM THE TRANSCRIPT · source
“I mean, it really starts with the people, just making sure that we have unbelievably talented professionals who are truly dedicated to managing these index funds on a day-to-day basis. And the way we think about it, our PMs also service traders. And so they're working very closely day by day, making sure that total stock market index fund and all of our other equity index funds are minimizing the tracking error. Also trying to make sure that we're minimizing transaction costs as we're transacting in the marketplace, also being cognizant of the tax implications of trading activity. And then also looking to add value at the margin through opportunistic ideas and through rebalancing corporate actions, new issues and things of that nature to try to eat into the expense ratio at the margin. But again, in a highly, highly risk-controlled way. And the great thing is we have a team of folks who have been doing this for decades and they're unmatched in the industry because”
2023-08-25 · Masters in Business · Greg Davis on Vanguard Portfolio Management · IDENTIFIED FROM THE TRANSCRIPT · source
“Amazing. And so that's really the pipeline for us. And then, you know, we will supplement that with experienced senior hires as we, you know, if there's turnover and we don't have somebody on the bench ready to go to move into a bigger seat as well. Or if we're trying to build out new capabilities like we've done in the past.”
2023-08-25 · Masters in Business · Greg Davis on Vanguard Portfolio Management · IDENTIFIED FROM THE TRANSCRIPT · source
“Yeah, so we are very heavily involved. We have, you know, in our group specifically, we have the investment management development program where every year we have a cadre of summer interns as well as full-time folks who just finish their undergraduate studies who come to us in a rotational program that gives them exposure to equities, various points in fixed income and risk and our portfolio review department as a nice entry point for people to explore and see what they really want to do. And so we just had a cadre that launched to their final placement earlier this week. And so there were seven individuals that spanned the range from risk to high yield trading to investment grade research. And it's a nice talent pipeline. And the great thing is the talent that we're seeing today is so much greater than the talent that we were able to attract 20 years ago. And so, you know, just the level of awareness, understanding of markets, the technical skills from an IT and data science standpoint that these folks are bringing to the table today is pretty.”
2023-08-25 · Masters in Business · Greg Davis on Vanguard Portfolio Management · IDENTIFIED FROM THE TRANSCRIPT · source
“And need an opportunity to go back And do a bit of a refresher. So we've been very actively involved in that whole process for our investment professionals. And, you know, it's paid off. It's paid spades in terms of it helps us make sure that we're recruiting the right people. It helps us in terms of retaining folks. Because when you work for a great boss, you're motivated to stay at that firm because we know it's difficult to make a strong connection with a boss at times. And to the extent that Vanguard has great leaders in the seats, and we feel like, hey, we have some of the coolest jobs that are available to people, couple that with great leadership. I mean, it's a win-win formula for long-term success for our organization.”
2023-08-25 · Masters in Business · Greg Davis on Vanguard Portfolio Management · IDENTIFIED FROM THE TRANSCRIPT · source
“Yeah, so Barry, it's a great question. You know, one of the things that we try to focus on is as part of our interview process, always trying to assess and gauge the willingness and the interest for folks to develop the leadership competencies in addition to the technical competencies. So when we think about our investment professionals, clearly they have to be technically sharp. They have to learn those skills to do their jobs day to day. But if they also want to be the head of a trading desk and lead a major function within our group or within broader vanguard, they also have to be really good at identifying talent, developing talent, maintaining really strong relationships, you know, being strategic thinkers and things of that nature. And so, you know, these are the types of things that we have a number of programs that we run to help us assess how people are progressing through that leadership journey. We help develop people on that leadership journey along the way. But the assessment process also allows us to figure out where people might have gaps.”
2023-08-25 · Masters in Business · Greg Davis on Vanguard Portfolio Management · IDENTIFIED FROM THE TRANSCRIPT · source
“Yeah, you're absolutely right, Barry. I mean, it's been a lot in terms of just the changing perception in the marketplace of how investors invest, right? And you're right. So you think back 30 years, you know, there were so many people who were focused on individual security selection, picking individual stocks. And the reality is that, you know, we know that's very difficult to do and outperform in a broader market. So there's been a big push for folks to get the appropriate level of asset allocation and a highly diversified, low-cost way. And the ETF wrapper allowed people to get that exposure inexpensively, holding it in a brokerage account. So it really provided a nice tailwind to folks in the indexing space who provided those products. And Vanguard is one of the big beneficiaries of that migration away from individual stock selection to broad-based index exposure.”
2023-08-25 · Masters in Business · Greg Davis on Vanguard Portfolio Management · IDENTIFIED FROM THE TRANSCRIPT · source
“Well, it's a lot. I mean, there's a tremendous amount of meetings, and the way I would describe it, Barry, it's a mix. You know, client related, it's media like we're doing today. It's also being part of the senior team that runs Vanguard, the business of Vanguard, right? So from a client strategy, marketing standpoint. And then, you know, overseeing the investment team. So a variety of risk meetings, a variety of economic meetings. So any given day could be slightly different, but it typically will capture those categories over time. And so there's always plenty of stuff going on in the marketplace and in the business that keeps us very busy.”
2023-08-25 · Masters in Business · Greg Davis on Vanguard Portfolio Management · IDENTIFIED FROM THE TRANSCRIPT · source
“That's very, very true. But it's also one of those things that you don't necessarily appreciate it until you've been doing a certain job for a while. So if you would have said to me, you know, when I first came out of grad school and you said to me, hey, I want you to go to the business side, I would have said, no, thank you. I really want to do trading and portfolio management. But you get to a point in your career where you feel like, hey, you've learned a lot, you've developed a team, and you're looking for new challenges and a chance to stretch yourself and grow and learn. And that's exactly what that opportunity provided.”
2023-08-25 · Masters in Business · Greg Davis on Vanguard Portfolio Management · IDENTIFIED FROM THE TRANSCRIPT · source
“So valued every minute that I was down, and unfortunately, or fortunately, depending on how you look at it, you know, the three to four year assignment ended up being 13 months. But I got a great opportunity to come back to run the fixed income group as you had.”
2023-08-25 · Masters in Business · Greg Davis on Vanguard Portfolio Management · IDENTIFIED FROM THE TRANSCRIPT · source
“Actually, learn about the business, how Vanguard Australia operates in the ecosystem, how we're trying to market our products and services, how we're engaging with regulators, the media, the whole nine yards, and then also being part of the board of directors down there. So from a broadening standpoint, that experience was unbelievable.”
2023-08-25 · Masters in Business · Greg Davis on Vanguard Portfolio Management · IDENTIFIED FROM THE TRANSCRIPT · source
“No, so we, my family and I, we moved to Melbourne, Australia where our office is. It was just a fabulous experience, both professionally and personally, just having an opportunity to work in a different country, embracing the Australian culture, but being part of the Asia Pack region, because at the time we had an office in Hong Kong as well where we were starting up our ETF business. But it was a tremendous experience because I had started off in bond trading, worked my way into portfolio management and running the bond indexing team for a number of years. And then I got asked to take this responsibility, which was much broader. So I was a mile deep on a subject matter of bond indexing, but now I had the opportunity to lead an equity indexing group, the entire fixed income team, our investment strategy team that does research for our clients around portfolio construction, those types of things. But the other big part of it was having an opportunity to be on the Australian executive team that actually ran the business. So from a broadening standpoint, I'm an investment guy. But that was an opportunity.”
2023-08-25 · Masters in Business · Greg Davis on Vanguard Portfolio Management · IDENTIFIED FROM THE TRANSCRIPT · source
“So it was interesting because I was pretty keen on staying in New York. I had a number of relationships that I built up and had another job lined up in New York City. But one of my best friends that I grew up with actually worked in the HR department at Vanguard. And she was like, you should come down and talk to some people at Vanguard. And at first, I kind of blew it off, but she was pretty persistent. So I came down, met with our head of the portfolio review department, which oversees our external managers, met with our head of brokerage, and then met with the head of bond indexing, who was Ken Vulpert at the time. And me and him had an instant connection. And so Ken was the main reason I came to Vanguard. Vanguard had a great reputation already. We were much smaller at the time. But Ken had a track record of bringing new people onto his team, developing them, and seeing them move into bigger jobs over time. And as somebody who was relatively new to the industry, that's the kind of mentor and boss I was looking for. So, you know, Ken ended up being, you know, one of the best.”
2023-08-25 · Masters in Business · Greg Davis on Vanguard Portfolio Management · IDENTIFIED FROM THE TRANSCRIPT · source
“And the fixed income flow was equally sized, just on a different floor, but also similar type environment. But it was a very interesting place to start a career after grad school. But that experience got cut short because right around that time when my class started, it was the tail end of the Asian financial crisis, the Russian group I started in the beginning of September of 98, and that happened in 97. But you had the agent financial crisis, the Russian ruble devaluation, and then you had long-term capital management blowing up. So there was a lot of changes that was happening across the street in terms of layoffs happening and our program got cut short. Ended up getting placed in a non trading role and decided to look at other opportunities outside and came across this great opportunity to pursue trading at Vanguard 24 years ago.”
2023-08-25 · Masters in Business · Greg Davis on Vanguard Portfolio Management · IDENTIFIED FROM THE TRANSCRIPT · source
“So I ended up going through the Wharton program. I did an internship in the summer at Citibank Securities and Fixed Income Sales and Trading, got a couple different job offers across the street. But the reason I went to Merrill was because they had this unique global debt rotation program that allowed you to rotate through a couple different business units in fixed income sales and trading. And I knew I wanted to do trading.”
2023-08-25 · Masters in Business · Greg Davis on Vanguard Portfolio Management · IDENTIFIED FROM THE TRANSCRIPT · source
“It's a long story, but originally I went to school for engineering, got the school realized that I wasn't very good at mechanical drawing, which is a big part of aerospace engineering curriculum. So I started to look at other opportunities and primarily in the business space. So start examining opportunities in finance, real estate and insurance. Penn State was one of the few schools that actually had an insurance major. And with the goal of actually becoming gainfully employed when I graduated college, I thought, hey, having a somewhat unique background would be helpful. And it worked out and had multiple job offers coming out of school from a number of different insurance companies and had an opportunity to be an underwriter for a few years before I decided to go back to school to get the MBA.”
2023-08-25 · Masters in Business · Greg Davis on Vanguard Portfolio Management · IDENTIFIED FROM THE TRANSCRIPT · source