I'm Chuck and I work at Vanguard and Invest in Active Funds
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Re: I'm Chuck and I work at Vanguard and Invest in Active Fu
Thanks for sharing! I was not aware of this blog series and I found the one you linked to very interesting.
"Contentment", the only thing you ever truly need more of!
Re: I'm Chuck and I work at Vanguard and Invest in Active Fu
Interesting. He is a senior financial planner at Vanguard advising HNW customers and he has five actively managed Vanguard funds in his personal portfolio. But does not name the funds. Enquiring minds would like to know.
Re: I'm Chuck and I work at Vanguard and Invest in Active Fu
What? He works at Vanguard and doesn't invest solely in TSM?
Clearly he should be fired.
Clearly he should be fired.
Re: I'm Chuck and I work at Vanguard and Invest in Active Fu
This is an awful analogy and smacks of rationalization. There is no comparison to buying something in the market for less than it is worth to you (which has nothing to do with market efficiency and you would expect to happen in any market where people have different utility curves) and buying something that the market is valuing less than it should based on expected future value in the same market.Last year, my wife Marguerite and I got a nice deal on a house, buying it for less than what we thought it was worth. That concept plays out in the stock and bond markets as well.
At least his last reason gets to the heart of his decision - he is willing to pay for a chance to outperform (even if the most likely outcome is underperforming) and Vanguard is willing to let you pay them to fulfill that emotional need.
Re: I'm Chuck and I work at Vanguard and Invest in Active Fu
The warning at the bottom of the blog is a hoot!
Link to Asking Portfolio Questions
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Re: I'm Chuck and I work at Vanguard and Invest in Active Fu
> active funds always deliver different returns from the index funds, thus providing a little extra diversification.
Leads to an idea.
Everyone who buys actively managed funds...buys either past returns or a good story. My idea is to buy only funds that have POOR past returns and unconvincing advertising. Clearly they do something very different from most other managers- so they should be nearly perfect counter-cyclic investments. So...better diversification!
Leads to an idea.
Everyone who buys actively managed funds...buys either past returns or a good story. My idea is to buy only funds that have POOR past returns and unconvincing advertising. Clearly they do something very different from most other managers- so they should be nearly perfect counter-cyclic investments. So...better diversification!
Re: I'm Chuck and I work at Vanguard and Invest in Active Fu
I would guess four of his funds to be:
VGHCX Healthcare
VHCOX Capital Opportunity
VWEHX High Yield Corp
VFSTX ST Investment Grade (ST Corp)
investor
VGHCX Healthcare
VHCOX Capital Opportunity
VWEHX High Yield Corp
VFSTX ST Investment Grade (ST Corp)
investor
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Re: I'm Chuck and I work at Vanguard and Invest in Active Fu
More interesting then this (and a bit surprising to me) is that Chuck started at Vanguard in 1998 as a writer with very little to no financial experience and in 15 yrs. or so is a senior financial analyst.
I would have thought these folks giving advice were brought in with a financial background from the get go.
Guess not.
Good luck.
I would have thought these folks giving advice were brought in with a financial background from the get go.
Guess not.
Good luck.
"The stock market [fluctuation], therefore, is noise. A giant distraction from the business of investing.” |
-Jack Bogle
Re: I'm Chuck and I work at Vanguard and Invest in Active Fu
Can you think of a better financial background than 16 years at Vanguard?...........Gordon
Disciple of John Neff
Re: I'm Chuck and I work at Vanguard and Invest in Active Fu
Would it be different if he had been a writer at some magazine before going back to study to get the creds to do what he does now? I guess I don't see what your issue is.staythecourse wrote:More interesting then this (and a bit surprising to me) is that Chuck started at Vanguard in 1998 as a writer with very little to no financial experience and in 15 yrs. or so is a senior financial analyst.
I would have thought these folks giving advice were brought in with a financial background from the get go.
Guess not.
Good luck.
Link to Asking Portfolio Questions
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Re: I'm Chuck and I work at Vanguard and Invest in Active Fu
There is only one person that I know who has an extensive financial background, it's my older bro with a PhD in Econ, big banks work history. I would never take financial advice from him. What is funny, is see him turn red,white,and blue in the face when you ask how he did and what happened to bigbank, 2007-2009 .staythecourse wrote:More interesting then this (and a bit surprising to me) is that Chuck started at Vanguard in 1998 as a writer with very little to no financial experience and in 15 yrs. or so is a senior financial analyst.
I would have thought these folks giving advice were brought in with a financial background from the get go.
Guess not.
Good luck.
Re: I'm Chuck and I work at Vanguard and Invest in Active Fu
Unless I am missing something: Total Stock Market did better than diversified equity by just about the amount
of difference in their expense ratios: over 5 years
Total 15.70% Vs. Diversified 15.53%
Expense Ratios:
Total: .17% vs. Diversified: .40%
Much of the higher long term returns of index is their low cost.
Here two lost cost funds - one active one passive have almost the same returns
except for the expense: Add the expense in and the index comes out ahead.
of difference in their expense ratios: over 5 years
Total 15.70% Vs. Diversified 15.53%
Expense Ratios:
Total: .17% vs. Diversified: .40%
Much of the higher long term returns of index is their low cost.
Here two lost cost funds - one active one passive have almost the same returns
except for the expense: Add the expense in and the index comes out ahead.
Re: I'm Chuck and I work at Vanguard and Invest in Active Fu
We should have a contest to guess which are his five active funds. Chuck could send winner a Vanguard coffee cup.investor wrote:I would guess four of his funds to be:
VGHCX Healthcare
VHCOX Capital Opportunity
VWEHX High Yield Corp
VFSTX ST Investment Grade (ST Corp)
investor
Re: I'm Chuck and I work at Vanguard and Invest in Active Fu
That is hilarious! Thanks for pointing it out - it's the best part of the blog post!retiredjg wrote:The warning at the bottom of the blog is a hoot!
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Re: I'm Chuck and I work at Vanguard and Invest in Active Fu
Chuck is a very wise.
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Re: I'm Chuck and I work at Vanguard and Invest in Active Fu
I do sometimes wonder if the actively managed funds at Vanguard may benefit from being close to the workings of the indexed funds.
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Re: I'm Chuck and I work at Vanguard and Invest in Active Fu
I can tell you the that some smartest guys are at mega hedge funds
Last edited by princetontiger on Mon Jul 19, 2021 6:57 am, edited 2 times in total.
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Re: I'm Chuck and I work at Vanguard and Invest in Active Fu
I own actively managed funds. DFA SV, Vanguard TIPS Fund, Bridgeway Ultra Small Company Market Fund, etc. Lots of Vanguard bond funds are actively managed. Low cost matters much more than passive vs active. It isn't that active management doesn't work. It's that it doesn't work well enough to overcome its costs.
1) Invest you must 2) Time is your friend 3) Impulse is your enemy |
4) Basic arithmetic works 5) Stick to simplicity 6) Stay the course
Re: I'm Chuck and I work at Vanguard and Invest in Active Fu
Chuck seems like a neat guy.EmergDoc wrote:Low cost matters much more than passive vs active. It isn't that active management doesn't work. It's that it doesn't work well enough to overcome its costs.
But I can’t help it. I use five Vanguard active funds—three stock, two bond—for one-third of my personal 401(k) portfolio. On purpose. Why??
Am I smarter than everyone else? Am I stupid? Am I a hypocrite?
No. I think my index funds are great, but I also like my low-cost active funds. Here’s why.
Re: I'm Chuck and I work at Vanguard and Invest in Active Fu
Companies need to grow. Current management seeks to grow the business organically. They are not starting a hedge fund here.
Not everyone can be convinced to index.
Not everyone can be convinced to index.
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Re: I'm Chuck and I work at Vanguard and Invest in Active Fu
Meh, I have a few active Vanguard funds too. All their duration/term-based and muni bond funds are technically actively managed. I also have a little bit of their Capital Opportunity Fund (think that's the name, VHCOX) and a smaller bit of their precious metals and mining fund (VGPMX). And in my 401k I have some Oppenheimer Developing Markets Fund (no EM index fund in plan). Of the stock funds, 2 of the 3 have out-performed after fees, 1 has lagged over the time I owned them, so it's about a wash. Oh, almost forgot, I have some PIMCO Total Return that dates back to the time it was the only bond fund in my 401k plan. Haven't sold it yet but am directing new bond money elsewhere. Even with all that, about 75% of my portfolio, or more, is indexed.
I think as long as you find a non-index tracking fund with low fees and passive management "style" (i.e., relatively low turnover), you can do reasonably well. Those funds probably aren't too different from the botique index funds that are popping up. High fees and high turnover is what will kill you over time.
I think as long as you find a non-index tracking fund with low fees and passive management "style" (i.e., relatively low turnover), you can do reasonably well. Those funds probably aren't too different from the botique index funds that are popping up. High fees and high turnover is what will kill you over time.
Don't do something. Just stand there!
Re: I'm Chuck and I work at Vanguard and Invest in Active Fu
I'll guess Wellington and Precious Metals.
Link to Asking Portfolio Questions
Re: I'm Chuck and I work at Vanguard and Invest in Active Fu
Wellington was the only one that popped into my head when I read it. The bond funds are not that much of a reach as already pointed out although I was thinking along the lines of muni's then saw the part about his 401k and though investment grade or tips.retiredjg wrote:I'll guess Wellington and Precious Metals.
Re: I'm Chuck and I work at Vanguard and Invest in Active Fu
Chuck should be applauded for disclosing how he actually invests. When someone gives advice, I like to know what the advisor is doing with his/her own money. A person giving advice should eat his own cooking. He indexes 2/3 of his money and his expenses are 0.14, so what is not to like? Some here would like a 100% indexed portfolio but what he is doing is okay, actually much better than okay.
A fool and his money are good for business.
Re: I'm Chuck and I work at Vanguard and Invest in Active Fu
Personally, I have Vanguard CA Intermediate Muni and High-yield bond funds, which are actively managed, and still very low ER.
Not everyone wants to own these types of bond funds, but due to liquidity issues, it makes sense for them to be managed funds rather than index funds.
Not everyone wants to own these types of bond funds, but due to liquidity issues, it makes sense for them to be managed funds rather than index funds.
Re: I'm Chuck and I work at Vanguard and Invest in Active Fu
I don't care about what he is doing but how he is rationalizing it - particularly that first justification would be very worrying to me in an advisor.nedsaid wrote:Chuck should be applauded for disclosing how he actually invests. When someone gives advice, I like to know what the advisor is doing with his/her own money. A person giving advice should eat his own cooking. He indexes 2/3 of his money and his expenses are 0.14, so what is not to like? Some here would like a 100% indexed portfolio but what he is doing is okay, actually much better than okay.
Re: I'm Chuck and I work at Vanguard and Invest in Active Fu
I don't want the smartest guys managing my money, I want the luckiest ones. But since I don't know who those will be, I'll settle for the ones who skim the least off the top.princetontiger wrote:This is dumb... I worked at a hedge fund, and I can tell you the smartest guys are not at Vanguard, they are at a mega hedge fund.
Re: I'm Chuck and I work at Vanguard and Invest in Active Fu
+1. I think that the mega hedge fund Long Term Capital Management was considered to have the smartest guys before its spectacular collapse.telemark wrote:I don't want the smartest guys managing my money, I want the luckiest ones. But since I don't know who those will be, I'll settle for the ones who skim the least off the top.princetontiger wrote:This is dumb... I worked at a hedge fund, and I can tell you the smartest guys are not at Vanguard, they are at a mega hedge fund.
Re: I'm Chuck and I work at Vanguard and Invest in Active Fu
This made me laugh. But it is also true. With very few exceptions, last year's miracle money manager will be pretty average for most of the future.telemark wrote:I don't want the smartest guys managing my money, I want the luckiest ones. But since I don't know who those will be, I'll settle for the ones who skim the least off the top.princetontiger wrote:This is dumb... I worked at a hedge fund, and I can tell you the smartest guys are not at Vanguard, they are at a mega hedge fund.
Link to Asking Portfolio Questions
Re: I'm Chuck and I work at Vanguard and Invest in Active Fu
Guess I will add a fifth fund to my list, just in case coffee cups are given out
I would guess his active funds to be:
VGHCX Healthcare
VHCOX Capital Opportunity
VWEHX High Yield Corp
VFSTX ST Investment Grade (ST Corp)
VDIGX Dividend Growth .... Added
investor
I would guess his active funds to be:
VGHCX Healthcare
VHCOX Capital Opportunity
VWEHX High Yield Corp
VFSTX ST Investment Grade (ST Corp)
VDIGX Dividend Growth .... Added
investor
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Re: I'm Chuck and I work at Vanguard and Invest in Active Fu
telemark wrote:I don't want the smartest guys managing my money, I want the luckiest ones. But since I don't know who those will be, I'll settle for the ones who skim the least off the top.princetontiger wrote:This is dumb... I worked at a hedge fund, and I can tell you the smartest guys are not at Vanguard, they are at a mega hedge fund.
That's a great quote.
1) Invest you must 2) Time is your friend 3) Impulse is your enemy |
4) Basic arithmetic works 5) Stick to simplicity 6) Stay the course
Re: I'm Chuck and I work at Vanguard and Invest in Active Fu
I own a bunch of actively managed funds too:
any of the tax exempt bond funds
any of the US Treasury bond funds
any of the money market funds
any of the tax exempt bond funds
any of the US Treasury bond funds
any of the money market funds
Disclaimer: nothing written here should be taken as legal advice, but I did stay at a Holiday Inn Express last night.
Re: I'm Chuck and I work at Vanguard and Invest in Active Fu
Why don't you work there any longer?.... Zing!princetontiger wrote:This is dumb... I worked at a hedge fund, and I can tell you the smartest guys are not at Vanguard, they are at a mega hedge fund.
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Re: I'm Chuck and I work at Vanguard and Invest in Active Fu
I guess just about any 5 actively managed Vanguard funds would work if your portfolio had about 70% VTSAX (TSM) - to get the expense ratio down to .14%.jdb wrote:We should have a contest to guess which are his five active funds. Chuck could send winner a Vanguard coffee cup.investor wrote:I would guess four of his funds to be:
VGHCX Healthcare
VHCOX Capital Opportunity
VWEHX High Yield Corp
VFSTX ST Investment Grade (ST Corp)
investor
I would replace VHCOX with Wellington Admiral, and then maybe VDIGX as the 5th.
fd
I love simulated data. It turns the impossible into the possible!
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Re: I'm Chuck and I work at Vanguard and Invest in Active Fu
Dan Solin recommends using a paid advisor only if he/she has a PhD in finance.
VT 60% / VFSUX 20% / TIPS 20%
Re: I'm Chuck and I work at Vanguard and Invest in Active Fu
The hedge fund guys were so smart that they left after collecting all their hefty fees ?Twins Fan wrote:Why don't you work there any longer?.... Zing!princetontiger wrote:This is dumb... I worked at a hedge fund, and I can tell you the smartest guys are not at Vanguard, they are at a mega hedge fund.
Re: I'm Chuck and I work at Vanguard and Invest in Active Fu
Have you ever seen the movie "The Smartest Guys in the Room"? Highly recommended. You will never use the phrase "smartest guys" again!princetontiger wrote:This is dumb... I worked at a hedge fund, and I can tell you the smartest guys are not at Vanguard, they are at a mega hedge fund.
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Re: I'm Chuck and I work at Vanguard and Invest in Active Fu
Interesting. Where does he get his data from? Those guys from Santa Barbara did a well known study showing those who had advanced degrees did worse then those who didn't. Same set of studies showing women did better then men.pascalwager wrote:Dan Solin recommends using a paid advisor only if he/she has a PhD in finance.
Good luck.
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Re: I'm Chuck and I work at Vanguard and Invest in Active Fu
I was not aware of that so thanks for sharing. I wonder if the name was a shot over Charles "Chuck" Schwab and the "Talk to Chuck" commercials on television.
I own an active fund from Vanguard: The Intermediate Term Tax Exempt Bond Fund. Unfortunately many active funds are very high cost and the performance of the fund can not offset those costs over time. Many of Vanguard's bond funds are "active" but at a very low cost.
Best.
I own an active fund from Vanguard: The Intermediate Term Tax Exempt Bond Fund. Unfortunately many active funds are very high cost and the performance of the fund can not offset those costs over time. Many of Vanguard's bond funds are "active" but at a very low cost.
Best.
John C. Bogle: “Simplicity is the master key to financial success."
Re: I'm Chuck and I work at Vanguard and Invest in Active Fu
+1avalpert wrote:This is an awful analogy and smacks of rationalization. There is no comparison to buying something in the market for less than it is worth to you (which has nothing to do with market efficiency and you would expect to happen in any market where people have different utility curves) and buying something that the market is valuing less than it should based on expected future value in the same market.Last year, my wife Marguerite and I got a nice deal on a house, buying it for less than what we thought it was worth. That concept plays out in the stock and bond markets as well.
At least his last reason gets to the heart of his decision - he is willing to pay for a chance to outperform (even if the most likely outcome is underperforming) and Vanguard is willing to let you pay them to fulfill that emotional need.
So how does he know he got a good deal on his house? Has he tried selling it?
Re: I'm Chuck and I work at Vanguard and Invest in Active Fu
It's a market, kind of like the stock market.Cosmo wrote:+1avalpert wrote:This is an awful analogy and smacks of rationalization. There is no comparison to buying something in the market for less than it is worth to you (which has nothing to do with market efficiency and you would expect to happen in any market where people have different utility curves) and buying something that the market is valuing less than it should based on expected future value in the same market.Last year, my wife Marguerite and I got a nice deal on a house, buying it for less than what we thought it was worth. That concept plays out in the stock and bond markets as well.
At least his last reason gets to the heart of his decision - he is willing to pay for a chance to outperform (even if the most likely outcome is underperforming) and Vanguard is willing to let you pay them to fulfill that emotional need.
So how does he know he got a good deal on his house? Has he tried selling it?
Re: I'm Chuck and I work at Vanguard and Invest in Active Fu
Passive and Actively Managed Funds.
In our imperfect SWAN or sleep well at night portfolio we have a couple of passive and a couple of actively managed funds from Vanguard and they are performing as expected--we do not intend to fix what is not broken.
In our imperfect SWAN or sleep well at night portfolio we have a couple of passive and a couple of actively managed funds from Vanguard and they are performing as expected--we do not intend to fix what is not broken.
~ Member of the Active Retired Force since 2014 ~
Re: I'm Chuck and I work at Vanguard and Invest in Active Fu
But not as efficient. Every share of XYZZY megacorp is interchangeable with every other share, but houses are mostly unique. And there are no high frequency traders or market makers. You can get a good deal on a house by being in the right place at the right time, with no competing buyers. This is much less likely with stocks.3504PIR wrote:It's a market, kind of like the stock market.
Re: I'm Chuck and I work at Vanguard and Invest in Active Fu
Define "smarter."princetontiger wrote:This is dumb... I worked at a hedge fund, and I can tell you the smartest guys are not at Vanguard, they are at a mega hedge fund.
Or define "hedge funds." The quants who murdered everyone for 5 years doing HFT would probably take some issue with the idea that the hedgies are the "smartest" guys.