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July 26, 2012 at 08:00 PM
Tim Buckley, managing director of Vanguard’s Retail Investor Group since 2006, will become the firm’s chief investment officer at end-2012, succeeding Gus Sauter. Buckley shared his views on what lies ahead for the fund giant.
What will you bring to your new role as CIO?
The ultimate measure of Vanguard’s success is the success of our clients. To that end, we will continue to focus on three broad areas: our people, our investment teams, and our global operations.
What is your view of the risk-management process?
From a philosophical perspective, there are several factors that set [Vanguard] apart. It all starts with our unique ownership structure. Being client-owned minimizes risks and conflicts of interest. For example, we don’t have a proprietary trading desk where Vanguard places bets for the company coffers—or worse, against our clients. All of the assets we manage are our clients’ assets, and we’re investing for them.
From a technical standpoint, we have a rigorous and robust risk-management operation. We invest heavily and judiciously in our risk controls. We continuously look at our controls, as the markets are dynamic. We test them and we look for evidence that they work. It’s an important part of how we manage the funds. As a Vanguard investor, you should expect nothing less.
What are some of your biggest concerns?
Some young investors are not taking enough risk, and too many older investors may be taking too much risk. The former is a consequence of the market environment, and the latter is a consequence of monetary policy.
On the other end of the age spectrum, retirees are struggling to find investment income in this low interest rate environment, and may have taken on additional risk such as swapping bonds for dividend-paying equities, or investing in longer-term or lower-quality bonds.
