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Why Vanguard Subadvisor Wellington Is Embracing ESG, Private Equity

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What You Need to Know

  • They fit well with Wellington Management's active investing approach, says the firm's new CEO, Jean Hynes.
  • Hynes became CEO of Wellington on July 1 after spending 30 years at the firm.
  • She wants Wellington, a key subadvisor for Vanguard funds, to become a magnet for diverse talent.

The new CEO of Wellington Management, a $1.4 trillion asset management firm and a major subadvisor for multiple actively managed Vanguard funds, says investments focused on environmental, social and governance (ESG) factors and sustainability “will dramatically change the structure of the financial markets” in the future.

Speaking at this year’s SALT conference in New York City, Jean Hynes explained that ESG and sustainability investing is “an area of a lot of complexity,” which is particularly “well suited for active management.”

Hynes noted that “active management has a vital role to play” in an environment where interest rates are low, affecting returns in fixed income assets, and the stock market is “where it is now.”

The S&P 500 has gained close to 20% year to date and is up almost 34% from a year ago.

“If we can deliver alpha of hundreds of basis points on equities and fifty to a hundred basis points on fixed income and … have the ability to find value in parts of the economic growth that may be private, those are all going to help our end clients,” said Hynes, who became CEO on July 1 after spending 30 years at Wellington.

She said the firm also has plans to build its private equity products, which offer “a lot of value creation” and are “very well-aligned” with the “long-term investing structure” of the 88-year-old firm.

“If we can find talent, we will continue to build platforms in the private side” as well in in liquid alt products.

Finding talent, especially diverse talent, is key for Hynes’ plans for Wellington. She wants Wellington to become “a “talent magnet for diverse talent, over the next decade,” attracting more women, Black and Latino employees.

She also has plans to expand the international footprint of Wellington, which already has 30% of employees in Europe, the Middle East and Africa (EMEA) and Asia-Pacific (APAC) regions.

“That’s going to continue” in order for the firm “to serve our clients in all corners of the globe,” said Hynes. “We’re only going to exist if we have the talent and deliver investment performance.”

(Pictured: Jean Hynes)