Bloomberg Talks Vanguard CEO Salim Ramji Talks Company Fee Change
Feb 6, 2025
Salim Ramji, the CEO of Vanguard known for pioneering low-cost investment strategies, dives into the company's recent decision to reduce average fees. He discusses the importance of sharing economies of scale with investors and historical trends in fee reductions. Ramji also contrasts active and index management, explaining how lower fees can boost performance. He highlights Vanguard's commitment to reinvesting savings into technology and growth, while maintaining client satisfaction in an evolving market.
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Vanguard's Client-Owned Model
- Vanguard's unique structure, being owned by its clients, allows it to share profits via fee reductions.
- This model has led to over 2,000 price cuts since the company's founding.
Active vs. Index and the Importance of Low Fees
- Vanguard focuses on providing both active and index funds at low fees.
- Their active fixed income funds have a 91% outperformance rate over 10 years due to lower fee headwinds.
Vanguard's Active Management Strategy
- While Vanguard is known for index funds, its first funds were actively managed, and it uses sub-advisors for some active equity strategies.
- Vanguard has been increasing its active ETF offerings and plans to continue this trend.