Morningstar - Changes at Vanguard, but Our Confidence Remains

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nexesn
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Morningstar - Changes at Vanguard, but Our Confidence Remains

Post by nexesn » Wed May 16, 2018 8:37 am

Not the most in-depth discussion, but for those who are interested, Morningstar posted this on their website today. I was more surprised with how young the Morningstar Manager Research Analysts where, than the information they were discussing :).

http://www.morningstar.com/videos/86539 ... mains.html

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Doc
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Re: Morningstar - Changes at Vanguard, but Our Confidence Remains

Post by Doc » Wed May 16, 2018 12:08 pm

The thing that bothers me most was "The search is still on. Vanguard is looking to hire a portfolio manager to lead their corporate bond desk."

That tells me that Vanguard doesn't have any depth in the fund's manager team unlike Pimco's PTTRX where other managers already on the team stepped up to the lead when Gross left.
A scientist looks for THE answer to a problem, an engineer looks for AN answer and lawyers ONLY have opinions. Investing is not a science.

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nisiprius
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Re: Morningstar - Changes at Vanguard, but Our Confidence Remains

Post by nisiprius » Wed May 16, 2018 12:18 pm

The manager of the Vanguard Total Bond Market Index Fund continues to be Joshua C. Barrickman, who took over from Kenneth E. Volpert in 2013. I don't remember any angst about that at the time, nor do I remember any obvious issues from the transition. The fund has just chugged along tracking its index.
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jhfenton
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Re: Morningstar - Changes at Vanguard, but Our Confidence Remains

Post by jhfenton » Wed May 16, 2018 12:43 pm

Doc wrote:
Wed May 16, 2018 12:08 pm
The thing that bothers me most was "The search is still on. Vanguard is looking to hire a portfolio manager to lead their corporate bond desk."

That tells me that Vanguard doesn't have any depth in the fund's manager team unlike Pimco's PTTRX where other managers already on the team stepped up to the lead when Gross left.
It implies the departure was unplanned. I don't think it tells me anything about their depth. It's not unreasonable to take a bit of time to decide whom to hire or promote.

I think the whole M* discussion is a bit silly. The bond funds in question are not index funds, but they are highly-constrained, process-driven funds that do not depend on a star manager making daring market calls. I don't think I've ever known the name of any of my Vanguard fund managers, even the active ones.

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Doc
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Re: Morningstar - Changes at Vanguard, but Our Confidence Remains

Post by Doc » Wed May 16, 2018 3:50 pm

jhfenton wrote:
Wed May 16, 2018 12:43 pm
It implies the departure was unplanned. I don't think it tells me anything about their depth. It's not unreasonable to take a bit of time to decide whom to hire or promote.
OK. Unplanned departure - agreed. I'm comparing the situation with the Gross departure from Pimco where the fund management was immediately turned over to someone (actually 3 people) already part of the management team. In the Vanguard case the "second in command" was not promoted to the position. Indicating the possibility that the second tier staff was deemed not ready to take command and they have to go outside to find a more experienced manager. That doesn't say anything good about the depth of experience and/or capability of the Vanguard fund management team.

Cost matters. And you can save costs by not spending a lot on salaries of those that are "second in command" of a fund by hiring less experienced (capable?) people for those supporting positions.

I already bailed on the two funds involved in favor of their indexed brethren. My IPS requires a five year manager and/or index tenure. When a manager leaves and is not replaced internally I will move to a similar fund if there is little or no cost involved rather than wait several years to find out if the new management is effective.

Risk management.
A scientist looks for THE answer to a problem, an engineer looks for AN answer and lawyers ONLY have opinions. Investing is not a science.

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