The Unsung Art of Managing the First (Almost) Trillion Dollar Fund

in the nine d billion range right now. And we're talking about Jerry O. Reiley at Vanguard and what do you do at Vanguard? Eric is the guy who makes sure that you're Vanguard stock index fund tracks the index right the index lives into vacuum, and he has to get as close as ken to it and deal with the realities of tracking stocks that come in and out corporate actions. It's a lot more complicated than it looks. But his one fund is the Total Market Fund, which

is the largest fund in the world. As you said, I think it's nine close to nifty billion right now, and that's sort of the biggest fund he runs, but he runs many, many and some are mutual funds like that one, and others are actually e t s. Yeah, in Vanguard's case, e t F is like a share class of the index fund. So that includes v T I, which a lot of people probably know our own as

part of the whole package, and that is unique. So in a way, the Vanguard fund assets per fund are a little higher than others because their e t F is counted in that number. And uh, yeah, it's possible if we keep having this nice market that it can hit a trillion in a couple of months. Another thing about Jerry is that this is not a guy that we hear from often. No. I mean, the media is in int stayed in like Alpha. You know who's hitting the home run this year, the Jim Simons of the world,

the hedge fund managers. He's trying to tie for him, tying his winning. But what I find fascinating about him and others who do what he does is I think they're underappreciated as a whole, and they're they're rebating money

left and right. So if you take the total market fund that he manages, fifty billion in assets, it charges a roughly four basis points depending on the share class, and yet it only misses the index by one point five basis points, and an e t F for index funds should trail the index by the same amount of as the expense ratio. So if you can get closer to the index and the expense ratio, that's free money

back to the investor. And so in Jerry's case, he's basically returning about two d and thirty million back to investors through what we'll go into, which is securities, lending, trading acumen, and there's a lot of other tricks and opportunities that he can do to return that money. Also joining us on this episode is Annie Massa, a reporter with brit News, this time on trillions the unsung art of passive with Vanguard Almost trillion dollar man. Jerry, welcome

to Trilliance. Thank you. I want to ask about what you do every day. You know, I think of passive investment and it seems like it might be relatively hands off. So what are you doing all day? I mean there's a lot that goes into I mean, our job, if you boil it down, it really is to deliver the performance of the benchmark to our shareholders. And now how you do that? Is a little more complicated, so we'll

come in in the morning. Before we even get in, our data team has come in and they've already received all the indexes from the different index providers, and they've made sure that it's all the the corporate actions, the splits, the reverse splits, whatever else needs to take place is going to take place, so that we know that the index that we're tracking to two is the exact same index as S and P, as CRISP, as Russell, as fox See, and all these different index survivors are giving

to us. So once you have that, that's kind of the foundational piece, and then it's okay, my fund and the index making sure that everything that takes place throughout the day, So those things would be like all of the cash flows coming in, making sure that you have a really good understanding of what those cash flows are.

Any index changes that are happening over the course of the day, any syndicate offerings that may have priced to night before, and if the index is making the change that day, there's both the upweight and also we need to be able to fund the the buys that are taking place, any type of corporate actions that are taking place,

throughout the day. And then keep in mind that you know, we receive cash flows all the way up until four o'clock, so I could in total stock, for example, I may think that I have a you know, at three thirty, I could think I have a million dollar list that I'm buying today, and at three forty five find out that, hey, two million is being redeemed from the and so all of a sudden, it's like, okay, I need to stop and need to change directions, need to to reduce my list.

Um So, there are all sorts of things that are going to happen throughout the day that are going to force you to kind of change the way you trade. And then of course there's the actual trading itself. Um So, we are at desk of about twenty four traders and roughly split fifty fifty between international and US, and our job basically is to navigate, you know, the market in terms of you know, it's it's a fairly fragmented market, as you know, so you have thirteen different exchanges and

fifty different pools of liquidity. So when you have a trade list, what are the objectives? What is the urgency to get this list done? And what is the appropriate strategy. So understanding all of that kind of goes into your every day in terms of tracking that benchmark, and you know, we we want to be as tight as possible. We're talking fractions of a basis point, and we will receive a scorecard every morning letting us know how we did the previous day. So at no point do we think,

I hope we're tracking. We know exactly by ten o'clock the next morning, how fund did versus the benchmark the day before. So you said you had twenty four so traders working for you. How many funds do you manage? Well, in total, we manage a little over three trillion dollars across about two hundred and fifty different funds. And not every single fund is going to get cash flow every day.

There are some funds that really only received cash flows maybe mid month and end of the month, but the good portion of those two hundred and fifty would be receiving cash flows on a daily basis, which what will require us to trade. So you know, fortunately we have great technology, so we can you know, one one one portfolio manager can handle you know a number of different portfolios and and we work really have a kind of

a team concept here. So even though I might be running total stock market, I know that if I'm out that you know, Michelle Louis or Bill Coleman can take over the reins and and run the fund every bit as good as I can. So everyone get kind of gets cross trained. You have kind of a team of people that are assigned to your fund. Uh and um, you know in Read for example, I manage the Read fund as well. I know that Walt Mayman will be taken over if if if I'm on vacation or if

I'm out. So here's a question, how do you play defense? You have hedge funds out there who know when the indexes are rebalancing and what might be added or subtracted from the index. How do you handle that? How do we handle it? Yeah, so we have so when we have rebalances, which you know most of the indexes do

rebounces on a quarterly basis. So we um, you know, have a team, a specific team on the desk that is our rebalanced team, and they will they have history of our rebalance is going back years and years about how we performed versus the benchmark. We will look at names. Um, you know, that the index provider is going to notify

us ahead of time. UM, give us what they call a proform at index, which is basically the index that's going to be in effect on the date of the index changes, and then we'll figure out what we need to trade in order to be totally in line with the index on that date. So, I mean we're going to look at things like, you know, has the volume increased in names, has the price what kind of price action has happened since the announcement. Get a sense for if in fact people have started the front run names

and anticipation of the index buying on the day. And um, you know, the one great thing we have on the desk is that we have probably average ten uere here of about fifteen years, so we have some traders who've been here thirty odd years, but great tenure in terms

of understanding how these reboundces work. So we will be well aware of names where perhaps people have tried to get into an anticipation of of of you know, selling it to the indexes on the date, and some of those names we may decide we're not going to buy anything ahead of the index date and just buy it on the day and we also work closely with our teams in risk and in our transaction cost analysis team to make sure we're taking the appropriate level of risk

to minimum to kind of understand where that tradeoff is between tracking our versus having too much impact on a name. So I think, you know, you have a team that's been doing this for quite a while. It's not like there's a temp it that I can tell you, hey, this is the this is what you need to do every time there's a rebounds coming up. But just a

lot of experience and understanding of how these things work. Sure, and and this is a more specific example even, but all eyes are kind of on Tesla right now and the prospect of it being added to the s n P five hundred and my colleague has even quoted you in a story saying that would be an all hands on deck kind of trading situation. How would you think about that approach? You know, smp uh the way they handle that. There is an index committee and they will

determine when you know, Tesla is at it. If it is at it, I assume that at some point it will be at it. You know, if you look at the US equities right now, you would say that Tesla is probably an outlier in terms of if you're looking at the five SMP five hundred UM, I think the minimum market cap to get in there is a little over eight billion dollars, and currently Tesla is a three hundred and forty five billion dollar company, you know, a

stock that's up three year to date. And so the only reason it wasn't included was one of the criteria that SNP has is that it has to have uh, you know, positive earnings for four quarters, and it's just crossed that threshold, right, it just crossed that hurdle. Yeah, yeah, a little while ago. So now it's available, So it is potentially a candidate for inclusion, and as I mentioned,

we just don't know when that is. But in terms of, you know, the potential for an ad like like Tesla, I mean it would be one of the biggest ads ever in terms of notional I think it would be the biggest In terms of weight in the index. I think maybe Berkshire when it acquired Burlington Northern might have

had a bigger weight in the index. But it would require indexes would roughly need to buy thirty five to forty billion dollars worth of Tesla or roughly twenty five million shares, so that would immediately put Tesla as a top sort of fifteen name in the index. And UM when large names have been added in the past, SMP has looked for potentially corporate actions that may have had a big cash component. So, uh, if if I'm a five manager and I know, for example, that there's a

corporate action coming up. So for example, when Twitter was added, UM, it was back in June and Bear was acquiring Monsanto, and there was a huge component of that corporate action involved cash, so they you know, Monsanto left the benchmark and then you know, if you're managing money, you could take the proceeds you got from this corporate action and use that to buy Twitter. So it helped to minimize

kind of the turnover in the index. If we look out towards the end of this year, there really are no corporate actions that you would say there's a huge cash component to it, so we could maybe that might be the date that SMP decides to add it. They also have the ability to maybe add it um you know at the September quarterly rebounds. UM. So those are options available, you know, in terms of the trade itself,

we obviously will be very much involved. Um you know previously large names that got added to the SMP five hundred. Sometimes the issuers will decide that they themselves are going to do a secondary offering to offset some of the indexing demand. So if we look back, you know, over the years, I think Facebook and Google did something like that.

So if if Tesla was in a situation where they felt, hey, we we could uh you know, we could do with the proceeds and for whatever they wanted to use them for, they may decide to do something like that. Now I have not heard that that's the case, but that's that's the potential. This just comes to in a bigger topic, which is how companies get in and out of the index.

You run this massive fund, and there's this feeling and argument that comes up once in a while that once the stock gets into your fund, which is the SMP five hundred or the total market, it's like it can relax, Right, it's now got all this constant bid coming, gets all the flows. But there's many cases of companies getting kicked out of the SMP. Right, So Macy's went after it at it went down, it's now out. Do you sort of feel like you're downstream from the choices that active

managers make? Um Or is there some truth to the fact that once you get into the SMP there is a a sense that you've got a more comfortable life as a company. Yeah, I'm not sure i'd buy that, Eric Um. You know, if if we look right now, for example, at the S and P year to date, I mean, you're going to have companies that are up. You know, if I look at Navidio up up year to date, you know, PayPal up. You know, in the

eighties you've got Amazon up. And then the other end of it, you've got some of the cruise lines that are down seventy. So these names, I think you'd be hard pressed to make the argument that those, you know, either the ones that are doing well or the ones that are underperforming the market, that they were quite content just to get in there and and sit back. So I'm not sure I buy that. I would say that.

You know, if you think about all passive investors in total, we maybe represent the shares outstanding in terms of the ownership. So keep in mind that's SEV roughly as non passive investors. So I think things like price discovery very healthy. Um, you know, yes, we are priced takers. I'm not sure that's always a bad thing. We represent roughly five percent

of the daily trading for indexing. You know that that's a relatively small number, So I think there's certainly a lot of positives I think by being included in the index. If you think about it from our perspective, we're the ultimate holder. We're going to hold this these stocks, you know, forever, potentially as long as they remain in the index, and so our investment stewardship group, uh, you know, it's in

their best interest and in our shareholders best interest. These guys basically are going to reach out to these issuers to make sure that things like board composition, you know, corporate governance, executive compensation, you know, how they think about strategy, these types of things that are going to ensure that these companies are going to be around for a long time. So these are some of the things that I think are really benefits from being in an index. We just

talked about defense. These are things you have to do just to make sure you don't slip. But when you think about a passive fund, it should miss the index by the exact amount of the expense ratio if you do your job well. We study this a lot. We called the game of basis points and the unsung art of actually doing better than the expense ratio. So tracking difference would be the amount you miss and in many funds that amount is less than the expense ratio, which

you could say is a rebate. So for example, your your total market UM, that's the biggest fund in the world vt I. Right, you miss the index by about one point five basis points, but the fee is four bibs got two point five basis points that you made up on offense. Can you break down how that happens? Sure? So, um, if we look at that two and a half basis points, there's there's a number of different things that go into that number. I would say security lending is a piece

of it. So you know, brokers who are looking to borrow stock from Vanguard, they'll call us and deal with our sect loan area. It is kind of an area that's separate from the desk, but we work very closely with those guys in terms of you know, names that they're loaning out and things like that. There's also the day to day trading cash flows, and there's the rebalances that we have on a quarterly basis, which we've been doing for for quite some time. I'm a very experienced

team working on those. Those are opportunities to add value syndicate process. You know, obviously companies, you know, every day after four o'clock the phones will start ringing with brokers telling us that they have a syndicate offering. And because we show up as kind of a page one holder on Bloomberg, they're gonna want to know are we do we want to participate in the syndicate offering. And you know, most times the index provider is going to make the

change the following day, so we'll do in analysis. Does this make sense that we need to, you know, maintain our weight and is it sufficiently large where the index is going to make the change, And we'll go in on those the ones that we think are appropriate to go in on. And as long as the price that we buy it at, you know, is below the closing price. When the index is added, it's incremental value. It might be fractions of a basis point, but that will add

up over time. Erica. So I would say the combination of of of sect landing, syndicate process, working index changes weren't working complex corporate actions. You know, there's plenty of corporate actions that they're they're not easy in terms of you know, some of them are mandatory, which are pretty straightforward, but there's a lot where you get to elect and you know, what's the what percentage should we go for

stock on this deal versus cash? And you're getting feedback from our brokers to say, hey, this is what we think most people are going to do, and then we decide this is what we think is appropriate for us, and then figuring out what we elect and then what the probation will be and how index providers are going to handle that. There is the potential to add fractions of a basis point over the course of a year when you do that, and obviously, you know, having an

experienced team doesn't hurt. And I know these numbers get so small when you talk basis points, but we convert the we multiply that savings by the assets and you're looking at for your one and it might be in the ballpark of twenty million dollars returned or rebated back if you look at all the SMP five hundred ETFs and index funds they returned about twenty three So if you add it all up, passive managers maybe getting the neighborhood of a hundred million put back into the fund.

Which is interesting also because the sec lending is typically lending stocks to hedge funds, so you're taking money from them and then you're playing defense against them. So in a weird way, it's sort of transferring money from hedge funds to the to the little guy, which is rare and perhaps refreshing that that that happens. And I guess I just ask you, do you find the people notice this like doesn't get much press attention. Um, that's what

we call it unsung. Yeah, internally we we you know, I mentioned that we get a report every every morning around ten o'clock to let us know how the fund was doing. Uh And and obviously the first column that I go to is is the value add in terms of you know, how is my fundne you know, week to date, month to day, year to date versus the inchmark. And so we would know right up until and that's what everyone focuses on. And and um, you know, so among the desk, it's a badge of honor if we

can kind of incrementally add value for our shareholders. So it's something that we focus on a lot, you know, And I think it's not just the expense ratio. While the expense ratio is incredibly important and probably a great first filter, you know, obviously the lower expense ratio. Vanguard has been beating that drum for for forty odd years. I think other things that come into play are things like that tracking difference and uh you know, obviously benchmark

uh can can differ a little bit as well. So some of those other things will will come into but but tracking error is something that we are very much, you know, on top of you. So, Jerry, you brought up the scorecard a couple of times, and I gotta ask you, what's it look like so far this year? UM, I would say the numbers that are mentioned earlier, I would say, uh, is it looks like it's going to be on on course for that again. So another another

good year, UM in terms of performance. So despite everything that happened, uh, you know, back I would say in March, UM, there were some of the rebounces were canceled due to the fact that you know, people were just starting to go home for the first time working from home. There was some questions around, hey, you know, is this the right thing to do, But I absolutely think it was the right thing to do at that time based on

the environment. But you also saw that trading costs, the spreads on stocks, the amount of of liquidity that was

available kind of disappeared back in March. UM, So it was a very um you know in terms of you know, I've been trading for twenty five odd years, um, that was that was pretty bad time to be to be trading, because I would say most people, if you had kind of plugged in, you know, what are my cost estimates for trading this list, the reality was maybe two to three times what the what the expected costs would be based on the fact that just all of the whole

market micro structure had changed so much during during that period. Thankfully, we're at a period now where things have calmed down and it feels like things have gotten back to normal. But even despite that, we were still I would say, this is still going to be a very good year for us in terms of performance as the benchmark across the board. It struck me March especially that must have just been a crazy time to be doing what what

you do. And I'm curious, you know, when you think back, You've mentioned, you know, you've been doing this twenty five years, and you know you've seen the financial crisis ten plus years ago. Now, like, how did that moment in March compare with everything else that you've seen? Yeah, I would say it was greater than the global financial crisis in terms of just the trading it was. I mean there were um, you you'd be coming in in the morning and wondering if futures were going to go down limit,

wondering you know, what happened? What what did investors do last night? And you know, thankfully, maybe it's the it's the type of shareholders we had, but we actually had very few of our investors that transacted that got out of the market back then, and and um, a very very small percentage. So you know, thank God for that, because here we are, you know, up from our lows on March three. And obviously if you stuck with it,

you were rewarded for taking on that risk. And probably every every fiber in your in your body wanted to say, we need to get out because this is going to get worse. Um, But that's I think where if you've if you've gone through a few of these before periods where you've had extreme volatility in the market, probably getting out of the market is not the right thing to

do at that time. Well, you mentioned, um, how sticky Vanguard customers are, and you know that's a testament to Mr Bogol and you know obviously they're they're probably making

him very proud right now. Um. But but Jerry, I think you might also be making him pretty pretty proud because you know you're managing you know, you mentioned the three trillion dollar number earlier, but you also oversee the world's biggest mutual fund and one of the biggest e t f s and and by our account, I think you know you're somewhere in the nine hundred billion dollars

assets under management. Do you ever think about what it's gonna be like to hit a trillion which could happen, like you know, if the market takes off between now and the end of the year, and maybe there's a vaccine or something like we we could see you hit a trillion dollars this year. Do you do you have

like an alert set up for that moment? Well, I hope We're not tempting fate here because back in February that the fund was at around nine thirty and I need to tell you what happened over the next month. It assets got down below six billion. But yeah, we're right around nine fifty billion right now, and um, you know, so obviously trillion dollars is not that far away. It's it's never been Vanguard's goal to see, hey, we need to see if we can get you know, the first

fund to a trillion dollars. But I think what it does show us is that investors have bought into the idea of of low cost diversify funds. And obviously, the equity portion of a lot of our target date funds is total stock markets. So when people you know, sign up for their four oh one K or the target retirement funds and they say, hey, I want to retire in the equity portion of that is total stock So I'm the beneficiary of a lot of that cash flow

that is coming from our target date funds. So that's kind of has been a good source of the cash flows that are coming into the fund. So you know, when, when, when will it happen? I think there's a chance that happens later this year, but I I wouldn't want to tempt fate and and and to answer your question, yes, I think the van the systems folks are well aware that, you know, things are going to need to change when we hit a trillion, and they're on top of that

and have been on top of that for some time. Jerry, one of the things that makes fan Guard different from other e t F issuers is that your e t s have this patented structure where they're a share class and the mutual funds. How does that make your job different than it might be at different kind of e t F provider. Yeah, okay, good question. Yeah, so um, there's a couple of things I would say on that.

So um, you know, we sometimes will get calls from institutions who maybe they fired another manager and they would look to bring money to Vanguard, and they will tell you what front, Hey, it's we're looking to find a new manager. We just want equity exposure the mutual fund. We would not be huge fans of taking that money if we knew it was gonna leave a month from now or three weeks from now. But obviously, if you have an e t F, they're going to pay their

own freight on the way in. They're paying their own transaction costs, you know, bidass spread whatever it might be, and maybe even a tiny fee from the the the from the the issuer if it's an e t F. So for people who are short term, I think the e t F is is perfect um and it isolates the fund itself, you know, in terms of you know, we work closely with with with the folks in our Capital markets group who kind of run the e t F. You know, I think there's great benefits in terms of

index changes. We talked about some of the changes that potentially can happen when you have cash flows coming into the fund. It means sometimes that you don't need to sell because you can take advantage of that cash flow to buy the ads that are coming into the index. So we think that that structure works well. You know, I remember when we started vt I, you know, um and looking at the volume and celebrate when it when over ten thousand shares traded in one day. And now

it's an incredibly liquid vehicle. You know, there are times when for example, I need cash coming into my fund. For example, if I have ex dividends going out and I can elect rather than receiving stocks into the fund, perhaps it might be more beneficial for me to receive cash and then use that cash to to to fund the dividends. So there are lots of benefits to it, and and it works really well for us. And how much of your job now is automated? And are there

aspects of it that you see becoming automated over time? Yeah? I mean if I look back on you know, started when I started advaning gard, actually one of the people on the desk brought in a floppy disk this morning as a as a coaster, you know, as for as the holder coffee on, just as a joke. And we have people on the desk we actually had never seen it before. And if I think back to the early days, we had one dot machine on the desk that we

would use to send trades down to the floor. Very very different today obviously, um, in terms of the technology available to us. Wait, you mean Vanguard's not running on floppy disks right now, We're not. We're not running back in the in the early nineties, uh disks where how you you know, you saved your program and sent it down.

But uh, now obviously you know, incredible amount of attention is paid to technology in terms of let's see what are the manual chores that we used to do that they are now just fully automated in terms of you know, we used to back in the day you would have compare reports which would compare what we knew in the portfolio versus what what what the bank the custodian knew.

Now you know, we have reports that come in and it'll it'll just automatically tell you in there here's a break between you and the custodian and is it as a as a result of maybe a corporate action or what's the reason for it, and you can immediately focus on it. Whereas before you were looking at these green bar reports. Today, I mean we have obviously so we have trading desks here in Malvern, also in the UK and in Australia, so we have, you know, trading systems

where we have consistency of data. We can pass the trade around in terms of if we have global portfolios, we can start it in in in Asia, then move it to Europe and then come back to North America. For the guys who are working kind of on the international side, and so they just have consistency of data and great insights into terms of things like tracking er like I know, for example, when I go home at five o'clock, Um, I'm going to sign off as the

portfolio manager. We also have risk folks who are going to sign off, and we have a death supervisor who will sign off and they can see exactly that based on all the information available at five o'clock, here's where you're expected X anti tracking error is we never had that kind of insight, I would say ten or fifteen

years ago, but now we do. And um, you know. So, so the type of insights like I can look at total stock, which is, you know, stocks in the portfolio, and I can see which stock do I have my biggest misswait first demention mark and what how is that going to impact, if at all, my tracking error and so really good insights that will help us to kind of track even tighter than we have in the past. Speaking of that, UM, I just have a quick anecdote.

I went to interviewed Jack Bogel back maybe five years ago, and I asked him about some of this game of basis points stuff. And if you look at the Vanguard five hundred fund in nine, the tracking difference was sixty five basis points and the fee was forty six, so

it actually was worse than the fee, So bad job. Um. And he was telling me that back then they had a woman doing They sent it to a woman who had a part time job somewhere else, like I believe, like I want to say it a mattress company or something. But anyway, over the years that it's amazing to see that chart, the fee fell and the tracking improved to the point where it's now, you know, one point five

basis points. But anyway, just a um anecdote there, and then I just want to pivot to a question Morgan Barne on my team had, which is a good one to ask a lot of people, which is what keeps you up at night as we look forward, uh, you know into the next couple of years, what keeps me up at night. So I would say that we have we're fortunate in that we have a really, really good team on the desk. Uh. You know, I mentioned earlier that we've probably the average tenure is about fourteen years.

And you know, when I sign off in the evening, after we've done all the trading at four o'clock. We've processed everything. I get a chance to go through my portfolio and make sure that it's right where I think it should be. I'm going to sign off on that. And we also have a risk team that's going to sign off on that, and we also have a death supervisor who will sign up. So there's almost three sets

of eyes looking at every single portfolio. You know that you're tracking error, your ex anti tracking error is within acceptable whatever the limit might be. UM, and you can feel when you leave that everything is in pretty good shape. Now that's not saying there are days we come in that the following morning and find out, hey, by the way, you know, a portfolio brought in fifty million dollars. We were not aware of it. That's a that's a different

ball game. But we have systems in place. We have lots of eyes looking at portfolios at the end of the day. So by the time I get home and take the dog for a walk, I think I can I can I can rest knowing that things are in pretty good shape. UM. So there's not a whole lot I will say. When we have rebalances and we're trading fifty six billion dollars over the course of a week. I think it's uh, there's plenty of days when I'm thinking about this is what we need to do the

next morning, or did we remember to do this? And but but fortunately, as I mentioned earlier, we have twenty four people who are probably thinking the same thing, and we've we've lots of checks and lots of eyeballs that are looking at the same reports. And so I think over time we can feel relatively comfortable that even though it's it's a lot of money that we manage, we have we have really good systems in play and lots

of people who have been through this before. So that makes me kind of feel that we can we can relax when we get home. So, Jerry, Um, you sort of just described the penultimate team sport. I also understand that at one point in your past, um, you were less of maybe a team sport athlete and more of a long distance runner middle distance runner. I think, yeah, yeah, so yeah, back in my uh in my college days.

You know, I grew up in Ireland, but um, I I went to Villanova and attract scholarship and uh, you know, great great memories of running for Villanova and then even after school tried the professional running for a few years and competed at the eighty eight Olympics for Ireland. In I would say there's a lot lots of lessons that you would learn. And it's not just me, and there are other guys on the desk cour uh fairly competitive

in their in their particular sports. Um, but I think there are things like you know that you lessons you learn from from from me. It was tracked, which were you know, hard work, being able to operate in an environment where things can change in an instant. You know, you start in a race, you think, hey, we're gonna go through. We think we're going to go out in about fifty eight seconds maybe for the first quarter, and all of a sudden someone decides to go out in

fifty six seconds. Well, all of a sudden, your plan has to change. That happens to on the desk where you think trading a list and uh, you know, I run my five million dollar list, and all of a sudden, you know, you get an institution called in and say we're bringing in an additional four hundred million today, and

so you have to change plans. There are things that happened late and late late in the day, like three fifty five, and you have to be able to change and react in an environment where it can be fairly intense. And I'm really thankful of what tracted for me in terms of being able to operate in that type of an environment in my rate. Did you run the mile under four minutes one time? Yes? Yeah, that's impressive. Eric.

But then, um, if I tell you that the world record was broken for the five thousand earlier this week in Monaco and the uh, the gentleman who did it, I forget his name, but he ran three miles, you know, three point one miles for five kilometers in twelve thirty five, which is almost like three four or one miles back

to back. So it just puts things in perspective. So it's a long way of saying I'm glad I found a job away from track because I don't think I would have been able to support myself today based on the type of times they're running. Yeah, so I have to ask how close to a four a minute mile can you run? Today? Um? Not even close? Yeah, you know, I'm more of a biker these days. Yeah, so I get out on the bike. I have a couple of

friends in the neighborhood. We'll go out and do liket mis on on on a Saturday, on a Sunday and it's a lot more forgiving on the knees and hips and uh yeah, so, uh, the bike has kind of taken over from the running. I think all those years of running, Uh, the knees took a little bit of a pounding and it's the bike is way more forgiving right now. Um So, Jerry, my last question for you

here is you know what you've described. It's it's like the one of the most interesting jobs sort of in finance, I think where you know the S and P five hundred especially, is this penultimate thing that and you guys are sort of in the trenches making sure that you know the Vanguard Vanguard's name does this thing as as as well as anybody in the business. And I'm just curious, um on sort of a personal level for you, like if you weren't doing this, have you ever given thoughts

of like what else would you be doing? Well? You know, I I do. I'll tell you when I think about that is when I when I go back to Ireland and I see guys I went to school with and they're doing. Believe me, they're they're doing very different things than I'm doing today. And I think how different it could have been if I never came to the US

and never never ended up at Villanova. Maybe, you know, I don't know what I'd be doing back home, but I knew, within i'd say, a month of being on the trading desk here at Vanguard, that this is what I wanted to do. I mean, I just couldn't wait on a Sunday night. I couldn't wait to get into work on the Monday morning. And when Friday would hit, you know, it was great because we you know, it was a couple of days to relax. But Sunday evening, I was like, yeah, I can't wait to get back in.

Here's where we got going on this week. And I think most of the people on the desk feel that they just have this passion about about trading, that that's what they love to do. That's what gets through juices going in terms of you know, we look ahead. We have a group that kind of picks out corporate actions

that are happening over the next two weeks. And when I assign those trades, different people on the desk, you know, you can immediately see people doing the research figuring out what's the strategy we want to use to to to for this complex corporate action that's coming up. I think everyone that we've had very little turnover on the desk, So I think when we hire people, we look for

that passion. And certainly when it comes to funds like you know, the five hundred or total stock Market some of our kind of flagship uh you know funds um there is incredible pride and making sure that those funds are performing and delivering the performance that our investors expect. And that's what gets us, That's really what satisfies us.

When we get to talk to some of our shareholders at events like when we used to have the Bogo Heads meeting, you get to talk to people and they tell you, hey, your fund helped put my kids through college, you know, helped us acquire a nice home, help me retire early. Those are fantastic stories. And really that that's what we care about, is is is making sure that

we're delivering the performance of the funds. And and and I think that's I speak for the rest of the desk when I say that, all right, I thought of one more question. Jerry, and this is this is actually truly the last one. And it's when that we often ask people, Um, what is your favorite E T F ticker? Oh, it has to be v t I. Yeah, I'm a bit of a homer when it comes to that. I knew you were going to say that, and it can't be v t I. It has to be something else. Uh, well,

you know it's first cousin is VOO. I guess, uh you know which is but uh, you know if if you know. Obviously people find out sometimes what I do and they were like, hey, what should I do? You know what I always say, Well, take a look. I'm not telling you what to do, but take a look at vt I, take a look at VOOR or the funds, whatever you decide is best for you. It's a tough question for him because Vanguard, I think, only has one cool ticker, which is VCR, which is the consumer discretionary.

And that's accidental. I didn't even mean it. Um, I guarantee it. Although Woo you could argue is interesting because it's Roman number five, Oh, which is five? Okay, did you know that, Jerry? I'm not until you just told me. Okay, I think that's why they did it, or again it was an accidental situation. But yeah, you guys don't really um do much on the ticker front. That's just not your game. It's not our game. Yeah, I mean we'd

like to think. I think when we when we do come out with with funds and and ets, you know, Eric, that that we're looking for things that are not not just a fad, right, it's it's that we think to have an investment merit. And yeah, maybe we don't have the most creative when it comes to assigning tickers, but you know, it's a long game. It's a long game exactly, all right, Jerry or Riley, thank you so much for spending time with us on Trillians. You're very welcome, guys,

Thank you very much. Have a great day. Thanks for listening to Trillions until next time. You can find us on the Bloomberg Terminal, Bloomberg dot com, Apple Podcasts, Spotify, and wherever else you like to listen. We'd love to hear from you. We're on Twitter, I'm at Joel Weber Show, He's at Eric Baltunas, and you can find any at Antonia b Massa. This episode of Trillions was produced by Magnus Hendricks. Francesca Levy is the head of Bloomberg podcast Bye