Rodney Comegys – The Mechanics of Indexing at Vanguard (EP.498)
Episode publishedPodcast: Capital Allocators – Inside th...Capital Allocators – Inside the Institutional Investment Industry
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There's the original concept of indexing, which is capture as much of the world's investment universe as possible, and you put it into a total market fund. For those, you're just trying to get from the largest security in The US to the smallest one that you can invest in. What you're looking for there is all the securities that are equities. And then you're thinking, are they liquid enough and available enough for us to invest in? Then you include them all. That's the simplest version of indexing. We do that all around the globe. 30% of the S and P five hundred is made up by seven companies. T
I'm Ted Sides, and this is Capital Allocators. My guest on today's show is Rodney Kamajes, the chief investment officer of Vanguard Capital Management and its head of Global Equity Indexing, where he oversees $8,500,000,000,000 in index assets across domestic, international, and multi asset strategies. Rodney joined Vanguard twenty seven years ago and has worked across operations, customer service, risk management, and investing. Our conversation covers the philosophy and mechanics behind running one of the world's largest index fund operators. We discussed Vanguard's ownership structure, valu
Nice to see you, Ted.
Why don't we start with your background and path joining Vanguard a quarter century ago?
It's been a heck of a twenty five years since I joined RadHaw business school. I grew up in a small town in Delaware. My parents didn't go to college. My mom took a job at the university of Delaware as a secretary so that I could get free tuition to university of Delaware. And I got exposed to some folks who were looking at other schools. I was fortunate enough to get into the university of Pennsylvania, but it was a little bit too pricey for my parents. I looked and remembered that I enjoyed my dad's stories from the Navy. I put the two things together, a chance to go to Penn with a Navy Rozz
I'd love to hear the difference in what you learned about leadership in the Navy and what you saw at business school.
What I saw in the Navy was the human aspect of it. Young sailors at the time on a submarine, it was all male. Today, it's integrated men and women. They were 18 year old kids who were really smart. Often the Navy had high standards to join a submarine, but they might not have the right opportunities. They were not fortunate enough to get an ROTC scholarship to Penn. They also had real world issues. Children with developmental needs, learning needs. They had a spouse. They might be going through a divorce. I've learned from captain Holland how to balance the need for excellence and results. We
When Andre introduced you to Vanguard, what was it that resonated for you?
It was the Vanguard case study that resonated, and it's the Vanguard story that resonated. Andre wrote in a case about Vanguard, and Tim Buckley had actually worked on it who became our chief investment officer and eventually our CEO here at Vanguard. You read the case and you go, this is an organization that is owned by its shareholders, for its shareholders, and returns its value back when it grows by lowering its fees. That's a really great outcome. You could already see it. We were in the early days, the choice of the direct investor, those that were interested in saving costs. By the time
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