Foto: Pixnio CC0. Entre CKDs y CERPIs llegó el capital comprometido a 2.394 millones de dólares en 2019
The year of 2019 ended with an issue of 13 CERPIs and 5 CKDs. The committed capital placed in 2019 amounted to 2.39 billion dollars of which 28% (659 million) have been called. The amount placed in CERPIs was 84%, while in CKDs it was 16% showing interest in diversifying global institutional investors in Mexico. This appetite for CERPIs could continue in 2020. Own estimates project that in 2020 commitments could be placed for 2 billion dollars.
The placement of 18 CKDs and CERPIs in 2019 is within the range of issuance that were made in 2015, 2016 and 2017 where they were placed 19, 14 and 15 respectively, although it means almost half of the 38 issuance that were made in 2018 (20 CKDs and 18 CERPIs). This record was because of the change in CERPIs that allows global investment in private capital.
In CERPIs the committed capital was 2.01 billion through 13 new funds. 11 funds of funds were placed, where the issuers were in order of importance: Harbourvest, Blackstone, Actis Gestor, Lexington Partners and Blackrock; there was also one of private capital (Spruceview) and another of energy (Mexico Infrastructure Partners).
Regarding CKDs, the committed capital was 383 md through 5 new funds in 2019. Two issues of mezzanine debt were placed (both from Altum Capital), one from real estate (Walton Street Capital), one from private equity (ACON) and another of energy (Thermion Energy).
The main issuer was Harbourvest Partners with a CERPI of 870 million dollars in committed capital, while in number of issues Blackrock placed 7 CERPIs in December which together add commitments for 199 million dollars.
The 144 CKDs and CERPIs signify commitments for 25.525 billion of which 76% are issues of 112 CKDs and 24% to 32 CERPIs. Of this amount 54% has been called.
In 2018, 18 CERPIS were placed, which meant commitments for 3.92 billion, while in 2019 there were 13 and the amount committed was 2.01 million dollars.
Currently, the investments in local (CKDs) and global (CERPIs) private equity is 6% of the assets under management of the AFOREs at the end of December and in resources to call is an additional 5%.
Given the amounts placed in 2018 (3.917 billion) and 2019 (2.011 billion), reaching 2.000 billion in 2020 is achievable. This amount would be calling 400 million dollars aprox (20%) that for the 211.917 billion in assets under management of the AFOREs at the end of December would mean 0.2%.
Aberdeen Standard Investments will talk about multi-asset funds during the first edition of Funds Society’s Investments & Rodeo Summit, which will take place on March 5, 2020 at the Intercontinental Houston Medical Center.
During the presentation, Tam McVie, ASI’s investment director, will talk about the use of none-traditional asset classes to create genuine diversification, taking as an example the Aberdeen Standard SICAV I Diversified Income fund, a fund that “relies on a rich opportunity set that can reduce reliance on equities and bonds; Capturing the breadth of opportunities.”
As Investment Director for Aberdeen Standard Investments, McVie is responsible for providing investment and product support for ASI’s multi-asset solutions, including the firm’s flagship Global Absolute Return Strategies (GARS) portfolio. Working with the Multi-Asset Investing Team since 2007, he uses in-depth knowledge and technical expertise to support the on-going needs of the firm’s institutional clients. Previously based in the UK, Tam joined Standard Life Investments’ Boston office in January 2012 and was instrumental in SLI’s expansion to the US. He is a frequent speaker at key industry conferences, including FundForum, Citywire and Asset International’s CIO summit. Tam joined SLI in 2004 and previously worked at UK pension manager, Friends Ivory & Sime (now part of Aberdeen Standard Investments). He began his career with Standard Life Assurance Company in 1998.
The event will also be attended by Menno de Vreeze, who leads the firm’s international business development practice in the Americas, as well as Damian Zamudio.
Menno de Vreeze is Head of Business Development – International Wealth Management at Aberdeen Standard Investments. Menno is responsible for the US Offshore market and Latin American Wealth Management channel. Menno joined Aberdeen Asset Management in 2010. Previously, Menno was Head Financial Institutions Benelux where he was responsible for business development towards financial institutions as private banks, retail banks, insurance companies, and wealth managers within the Benelux. Other previous work experiences include: Carmignac Gestion as Head of the Netherlands, ABN AMRO Luxembourg within the Private Banking department, and Accenture as a Business Consultant specialized in the Private Banking/Asset Management industry. Menno holds an MS in International Business with a specialization in Finance from Rotterdam Business School. He has also studied at Ecole Supérieure de Commerce de Bordeaux and the Skema Business School in Sophia Antipolis. Menno holds FINRA 7 and 63 licenses.
Zamudio is a Sr. Business Development Manager at Aberdeen Standard Investments. Damian is responsible for building and maintaining relationships with investment advisors in wirehouses, RIAs, broker- dealers and family offices across the Americas international markets. Damian joined Aberdeen Asset Management in November of 2012 and brings over a decade of experience in wealth and asset management businesses. Previously, he worked at Merrill Lynch Wealth Management as a consultant for domestic and international financial advisors to facilitate guidance in asset allocation, investment trading and due diligence. Prior to that, Damian was Vice President at BlackRock responsible for sales of mutual funds, SMAs and alternative investment products across US private banking and international markets.
If you are involved in the management of fund portfolios, or the selection and analysis of funds, and want to participate in this event, reserve your place as soon as possible by writing to info@fundssociety.com.
Photo: PxFuel CC0. Riesgo en Inversiones Privadas, Parte 3: “¿Deberíamos alocar a fondos privados de mercados emergentes?”
Don’t get me wrong! Having a proper allocation to emerging market equities and fixed income is probably a very good decision, but illiquid, private investments are an entirely different story in terms of emerging market risk and reward considerations.
Really smart people build portfolios with emerging market allocations to private investments that mimic emerging market allocations in their public positions. But these two allocations should be viewed entirely differently given the illiquid nature of private investments. Risk assessment should not be disregarded as much as it is in emerging market investment decisions. One must be paid for higher risk tolerances with outsized relative returns.
The trouble is that in the private space, outsized emerging market returns have been few and far between, but their associated risk profiles are clearly greater in almost every direction one looks. Just think about Abraaj’s fraud leading to their collapse, or the Chinese government making high profile private investment managers disappear only to be replaced by the government’s own proxies, or currency shocks and fluctuations in Latin America driven by uncertain political climates.
If you knew in advance that these events would take place would you still invest in these opportunities? Of course not! And since we do not have the benefit of hindsight when looking to allocate to future opportunities, we can only imagine what might go wrong and then assess our comfort level with that list of potential factors.
Developed market private funds, in general, just don’t have the same elevated risk profiles and deliver relatively similar returns. So why do really smart families and institutions continue to allocate to private emerging market investments? Clearly, they view the risk profile to be tolerable and view the relatively muted returns to be acceptable. It seems as if it is just more important to check the box and allocate some portion of their portfolio allocation to this area. This behavior is a part of a portfolio allocation theory that in practice just doesn’t assign the needed weight to most of the associated risks.
We have a different view. We think there is a better way to allocate to private investments. Allocations should be based first and foremost on mitigating risk and choosing high quality investments with the lowest relative risk profiles. If a stable, thematically relevant, risk mitigated private investment fund based in the US delivers a decent return potential, then one should not allocate to riskier emerging market opportunities that do not provide truly outsized returns. A safer investment environment with a sound strategy should outweigh the check the box allocation exercise.
After six successful yearly events in Miami and one in Madrid, Funds Society will host the first edition of the Houston Investments Summit & Rodeo on March 5th, 2020 at the Intercontinental Houston Medical Center.
The event will start at 1pm with a luncheon, followed by four, mandatory and 40 minutes long, sessions with specialists from Aberdeen Standard, Carmignac, Investec and Vontobel.
After listening to the investments ideas and the outlook of these specialists, participants will head to Houston’s Livestock Show and Rodeo, where they will enjoy a rodeo show followed by a Becky G concert from Funds Society’s private suite.
A shuttle will take them to the NRG Stadium, host of the Rodeo, and then back to the hotel after the show (complementary valet parking will be provided at the Intercontinental Hotel).
For qualifying guests attending from outside Houston, Funds Society will take care of the travel and accommodation expenses.
If you want to join Funds Society for a great investments retreat with a perfect mix of academics and one of the most traditional events in Texas, remember that spots are limited so please reserve your space at your earliest convenience. You can do so by writing an email here.
Jose C. González and Emilio Veiga Gil, courtesy photos. FlexFunds nombra CEO a Jose C. González y vicepresidente Ejecutivo a Emilio Veiga Gil
Given the growing demand for asset securitization services that FlexFunds provides and the strong growth experienced in recent years, which have made it an international reference in structuring investment vehicles, FlexFunds has announced the reinforcement of its management team.
Jose C. González has been appointed Chief Executive Officer. Jose, founder of the company and majority shareholder, is also the founder of Leverage Shares, FlexInvest, co-founder and former director of Global X, a provider of exchange traded funds based in New York. Jose was instrumental in the success of Global X, making the company a reference as a supplier of ETFs that today has exceeded $10 billion in assets managed in more than 60 different products. Throughout his career, Jose has acquired extensive experience in the asset management and brokerage businesses, having served in Prudential Securities, MAPFRE Inversión and Banco Santander. Jose obtained his degree at Universidad Autónoma de Madrid.
Emilio Veiga Gil, the company’s current Chief Marketing Officer, has been promoted to Executive Vice President. Emilio brings 20 years of experience in marketing and business development in financial services, banking, and consumer goods. Following his beginnings at PricewaterhouseCoopers, Emilio held senior positions in marketing and business development in leaders of multinational industries such as MoneyGram International and Dean Foods Corporation. He has led multicultural teams in four continents and has implemented international initiatives in more than 50 countries around the world. Emilio has a degree in Economics and Finance from St. Louis University, an MBA and a postgraduate in Marketing from ESADE Business & Law School and Duke University, and an Executive MBA, with High Honors, from The University of Chicago, Booth School of Business.
With these appointments, FlexFunds reinforces its management team to accelerate the growth experienced to date, which has led the company to exceed $4 billion in securitized assets in more than 200 issues and in 15 jurisdictions around the world.
For more information about FlexFunds, visit them at their site or write to info@flexfunds.com.
Foto: Casa Blanca. A Year of Living Less Dangerously
The publication last week of the U.S. — China trade deal and the final macro numbers for 2019 should set the stage for healthy economic performance and stronger market sentiment in China in 2020, but the risk of a return to tense relations between Washington and Beijing looms over 2021 and beyond.
The “phase one” trade deal should create a truce in the tariff dispute. President Trump appears to believe that declaring victory over China will boost his re-election prospects, and it seems that Xi Jinping is willing to cooperate. There are no signs, however, that the Trump administration will scale back its willingness to confront Xi on a range of issues, especially those related to technology competition. The resulting political tension, as well as the deal’s unrealistically high purchasing targets, could break the truce in 2021.
Headline writers will continue to focus on slower year-on-year (YoY) growth rates in China, but most investors understand that the base effect allows the economy to expand by far more today than at the faster speeds of a decade ago. This creates greater opportunity for Chinese firms selling goods and services to local consumers, as well as for investors in those firms.
Assessing the trade deal
The trade deal will likely accomplish Trump’s main objective: creating the appearance of an important accomplishment as the election approaches. But the deal did not create effective new solutions to most of the trade-related problems cited when the tariffs were launched.
On intellectual property issues, a Trump administration priority, the deal accomplishes little. Many specific steps in the agreement were previously announced by Beijing, and the new steps are incremental. Most importantly, the agreement does not require China to make legal and structural changes needed to ensure compliance. There also were no significant new commitments on exchange-rate management or industrial policy.
Overall, this deal is not a significant improvement over the Trans-Pacific Partnership (TPP) program cancelled by the Trump administration, or the draft bilateral investment treaty (BIT) with China that was negotiated by the Obama administration but abandoned by Trump.
The deal also leaves in place much of the tariff burden already borne by American companies and consumers. “Even after the deal goes into effect, Trump’s tariffs will still cover nearly two-thirds of all U.S. imports from China,” according to Chad Brown of the Peterson Institute for International Economics. “He will also have increased the average U.S. tariff on imports from China to 19.3%, as compared to 3%” before the dispute began.
The 2020 deal upside
There are important positive consequences of the deal. I think Trump wants the deal to succeed to boost his re-election prospects—and Beijing seems willing to cooperate—so the trade truce is likely to hold at least through November. By significantly reducing the risk of the tariff dispute escalating into a full-blown trade war, the deal is likely to boost sentiment among Chinese companies and global equity and bond investors who are thinking about increasing their China exposure.
The 2021 deal risks
Two things could derail the trade truce next year. First, there are as yet no signs that the Trump administration will scale back its campaign to confront Xi on a broad range of issues, especially those related to technology competition. By next year, it is possible that Xi may reconsider whether cooperating with Trump on trade makes sense at a time when Washington is taking a confrontational approach on most other issues. Of course, if there is a new American president next year, Beijing will wait to see how that administration approaches the relationship with China.
My second concern is that the deal calls for what I believe are unrealistically large increases in Chinese imports from the U.S. According to the terms of the deal, in 2020, China’s overall imports from the U.S. should increase by 50% over the 2017 baseline, and then increase by another 20% YoY in 2021, for a total two-year increase of US$200 billion. This includes increases over the 2017 baseline of 52% for agricultural and 257% for energy imports in 2020, and then further increases in 2021—19% YoY for agriculture and 60% YoY for energy.
There is, of course, room for the Trump administration to play with the numbers. The text of the deal states, for example, that aircraft orders as well as deliveries will count toward the Chinese commitment, so Beijing could sign a lot of contracts for possible later delivery to inflate the numbers. But this kind of thing will only work if both governments cooperate. As U.S. Trade Representative Robert Lighthizer acknowledged, “This deal will work if China wants it to work.” And if, after the election, the Trump (or a different) administration also wants it to work.
As an aside, the deal text includes a long list of goods that are targeted for increases to hit China’s import targets. Some of them are puzzling. Iron and steel, for example, are on the list, even though in 2017, the U.S. exported less than US$500 million worth of that to China. Also on the list: “perfumes and toilet waters”; “preparations for use on the hair”; and “tea, whether or not flavored.” (Yes, China is the world’s largest producer of tea.)
Yes, Virginia, China’s growth rate is decelerating
As we switch to the topic of China’s economic health, I want to start by addressing the headline writers who pointed out that last year’s GDP growth rate was the slowest since the Tang dynasty. I’d like to suggest another perspective.
China’s growth has been decelerating gradually for over a decade, but the size of the economy (the base) has expanded quite a bit. GDP growth was 9.4% a decade ago, but the base for last year’s 6.1% GDP growth was 188% larger than the base 10 years ago, meaning the incremental expansion in the size of China’s economy in 2019 was 145% bigger than it was at the faster growth rate a decade ago. In other words, there was a greater opportunity last year for Chinese companies selling goods and services to Chinese consumers than compared to 10 years ago, when the GDP growth rate was much faster.
I expect that the YoY growth rates of most aspects of the Chinese economy will continue to decelerate, and as long as that deceleration continues to be gradual, I do not expect panic from the Chinese government, or from investors.
Modest easing of monetary policy
A clear sign that the government has been relatively comfortable with the health of the economy is that there has been only modest easing of monetary policy. I expect that approach to continue in 2020. The focus will be on stabilizing growth in response to slower global demand, not an effort to reaccelerate growth.
As was the case last year, aggregate credit outstanding (augmented Total Social Finance) will likely expand just a bit faster than nominal GDP growth, but not to the extent in past years.
Derisking to continue
I also anticipate that the government will continue to take steps to reduce financial sector risks this year. As I wrote last month, I expect further consolidation of smaller banks. I also expect a continuation of last year’s experiments of selected defaults by state-owned and private firms, in an effort to push investors to price risk. I do not expect the government to relax their tight controls over off-balance-sheet (shadow) financial activity.
Likely to remain the world’s best consumer story
China’s consumers drove economic growth again in 2019, and I expect that to continue in 2020. Last year was the eight consecutive year in which the consumer and services (or tertiary) part of GDP was the largest part, and consumption accounted for 58% of GDP growth.
Strong income growth continues to fuel the consumer story. Nominal per capita disposable income rose 9.1% in 4Q19, up from 8.5% a year earlier and 9% two years ago.
Household consumption spending rose 9.4% YoY in 4Q19, compared to 8% a year earlier and 6.1% two years ago. This metric for consumer spending, which is published quarterly, includes a wider range of services compared to the retail sales data. Services now account for about 46% of household consumption.
Pork prices should ease, so inflation shouldn’t be a big problem
An outbreak of African Swine Fever decimated China’s hog population last year, which pushed up the price of pork—the country’s primary protein source. Headline CPI rose to 4.5% last month and will remain elevated this year, driven entirely by pork. The disease seems to be fading and pork prices stabilized recently, although there is likely to be another spike in January, as the Lunar New Year holiday boosts demand. Core inflation, which was 1.4% YoY in December, should remain low, and I do not expect inflation to have a significant impact on consumer sentiment.
Modest improvement in CapEx likely
Investment spending by private firms was weak last year, largely due to uncertainty resulting from the Trump tariff dispute. The signing on Wednesday of the trade deal is likely to reduce that uncertainty, leading to a modest pickup in CapEx spending. Only modest, because the risk of a return to higher U.S. — China tensions in 2021 remains.
Bernardo González Rosas, courtesy photo. Amafore" Esperamos que la primera inversión en fondos mutuos internacionales ocurra en las siguientes semanas"
2019 represented a year of challenges and achievements for the Mexican Retirement Savings System (SAR). According to the Mexican Association of Administrators of Retirement Funds (Amafore), “after the turbulence of the financial markets during the last months of 2018, the capital gains accumulated during 2019 were the highest in the history of SAR, as they rose to 486.4 billion pesos. Today, of each peso managed by the system, 41 cents come from the returns generated.” Additionally, Mexico became the first Latin American country to adopt Target Date Funds for the administration of retirement funds.
“The migration of resources to these new funds was carried out successfully in mid-December, facilitating greater capitalization of workers’ returns and, something that surely, will contribute to improving the pensions of Mexicans,” added Amafore.
However, the association notes that there are still pending issues.
For Bernardo González Rosas, president of the institution, “time is up” to approve a pension reform. Although González would like to see a complete reform to improve the pensions of workers in Mexico, he is aware that this is difficult to achieve, so “we believe that we should start with an indispensable minimum reform: that the mandatory contribution be increased from 6.5% to 15%, which is the indispensable minimum,” he says.
He also considers that “it is very important that the investment reform, which is pending in the Chamber of Deputies, be approved as soon as possible so that we can better invest and diversify the resources of the workers. If we invest part of resources in other countries when Mexico is not doing as well as we would like or does not grow at the rates we would like, we can invest in other countries where such growth is taking place… What is important is to generate the greatest return to the workers.” He emphasized.
Regarding the use of international mutual funds in Afores’ portfolios, González Rosas told Funds Society that although “we still don’t have investments in these funds, we expect it to happen in the following weeks.”
Last September, Amafore highlighted 42 international mutual funds from 11 fund managers so that Afores can consider for their investments. As confirmed by Álvaro Meléndez Martínez, technical vice president of Amafore, the list, which is updated every month, already includes 70 funds from 14 administrators, ten funds and one more manager (JPMorgan) since the last update.
Pixabay CC0 Public Domain. UBS ha sido la gestora extranjera con mayor flujo de entrada por parte de las AFPs chilenas durante 2019
Investments in foreign funds by the Chilean AFPs registered net outflows of 1.8 billion dollars during 2019, according to the monthly report issued by HMC Capital. At the end of December, total AUM of foreign funds were of 84.3 billion dollars, which represent 29% of the pension fund portfolios.
Outflows were registered mostly during the second half of the year. While the first 2 quarters of the year registered positive inflows for an amount of 2.5 billion, and 411.7 million dollars respectively, these were offset by net outflows of 3.6 and 1.1 billion dollars during the third and fourth quarter of 2019.
It is important to highlight than since the social protests started in Chile on October it is not possible to distinguish a clear trend in the direction of flows as the last three months of the year have shown different behaviour. During the month of October 760.8 million dollars net inflows were recorded, 1.6 billion in November while outflows of 3.4 billion dollars were registered in December.
Significant outflows in equity funds
In terms of management style, active funds have registered outflows of 2.1 billion dollars versus net inflows in passively managed funds and 73.7 million dollars in money market.
By asset class, the AFPs have shown preference for fixed income funds during 2019 with a net inflow of 424.7 million dollars during the year, versus equity funds that have registered outflows of 2.3 billion dollars during the same period of time. In accumulated terms, equity funds represent 72% of foreign funds invested in Chilean pension funds portfolios, versus 27% in fixed income and 1% in money market.
Specifically, in fixed income, net inflows during the year have been invested in financial bonds funds (+595.2 million dollars), emerging market debt in hard currency ( +427.5 million dollars), US High Yield ( +399.5 million dollars) and convertible bonds in euro (+245.1 million dollars).
On the other side, the Chilean pension funds have reduced their exposure to, among others, emerging market debt in local currency (-409.3 million dollars), flexible bonds ( -243.1 million dollars) and Latinoamerican emerging market debt (-206.1 million dollars).
In equity markets, there has been significant flow of funds directed towards strategies that invest in China ( +1.77 billion dollars) and to a leaser extend to Korean and Asian equity markets with net inflows of 305.5 and 230.4 million dollars respectively. In contrast, there has been signifcant outflows in Japan large Cap asset class of 1.116 billion dollars, German equity (-962.4 million dollars), Asia ex Japan (-788.0 million dollars), Hong Kong ( -764.1 million dollars) and India ( -664.9 million dollars).
Asset manager ranking
Five have been the foreign asset managers that have succeeded in registering inflows over 500 million dollars. UBS leads the annual ranking with net inflows of 1.281 billion dollars, followed by Aberdeen (900.1 million dollars) and JP Morgan ( 737.5 million dollars). Lord Abbet and Pimco occupy the fourth and fifth position with net inflows of 663.5 million dollars and 541.7 million dollars respectively.
On the opposite side, seven asset managers have register net outflows over 500 million dollars during the year. GAM and Matthews overpass the 1 billion mark with net outflows of 2.070 and 1.016 billion dollars respectively. These two are followed by: Invesco ( -937 million dollars), Schroders (-826.9 million dollars), Fidelity ( -788.8 million dollars), NN Investments ( -752.4 million dollars), DWS ( -702.9 million dollars) and BlackRock ( -522.2 million dollars).
In terms of total AUM as of end 2019, in both active and passive funds, BlackRock iShares leads the raking with an amount of 8.19 billion dollars as of end December 2019, followed by Investec and Schroders with a total aum of 7.5 and 6.99 billion dollars respectively.
The chart bellows shows the ranking of asset manager with a total AUM over 1.000 million dollars as of the end of 2019.
Funds with largest inflows and outflows during the year
Regarding the funds that have recorded the largest inflows, the funds AMUNDI FUNDS EMERGING MARKETS BONDS, ABERDEEN GLOBAL CHINA A SHARE EQUITY FUND and UBS CHINA OPPORTUNITY (USD) stand out with inflows of 1.5 billion dollars, 1.3 billion dollars and 887.2 million dollars respectively.
On the contrary, between the 10 funds that have registered the largest outflows during the year, JULIUS BAER -LOCAL EMERGING BOND FUND: AMUNDI FUNDS EMERGING MARKETS BONDS and DWS DEUTSCHLAND IC stand out with outflows of 1.4 billion dollars,1.4 billion dollars and 958.8 million dollars respectively.
Lastly, as a side note, we must point out that the fund AMUNDI Emerging debt and HSBC Global Liquidity in dollars with inflows and outflows are funds with different ISIN code but that seem to follow similar investment strategies.
Ignacio Rodriguez Añino has been appointed Head of Distribution for the Americas at M&G Investments. He will bebased in Miami.
According to a press release, Rodriguez will be tasked with the responsibility to deepen and grow M&G’s wholesale and institutional client base in the region, helping customers access investment solutions which draw on M&G’s strong capabilities across fixed income, equities, private debt and real estate asset classes.
Ignacio joined M&G in 2005 as Country Head for Iberia, adding Latin America to his remit in 2012. He will continue to report to Jonathan Willcocks, Global Head of Distribution at M&G.
Of the appointment, Willcocks comments: “I am delighted to announce that Ignacio Rodriguez will lead our American business. With over 30 years’ experience in the industry and 15 years working at M&G, Ignacio has extensive expertise across different areas of asset management and great knowledge of our business. This appointment is the latest step in M&G’s strategy to invest in global locations and markets offering client development opportunities and scope for future growth.”
Ignacio’s appointment follows the opening of two M&G offices in New York and Miami in 2018, covering the US institutional and offshore Latin American markets respectively. M&G has over $352 billion in assets under management.
Jack Bogle, Vanguard. One Year After His Passing, Jack Bogle’s Legacy is Still Strong
A first-of-its-kind opinion survey released by the Institute for the Fiduciary Standard reveals how much the trailblazing index fund entrepreneur and Vanguard founder, Jack Bogle, influenced investors.
Bogle’s investing principles and index funds are fixed in the American mind; his reputation stands alongside giants in American business.
The survey, designed to commemorate his passing on January 16, 2019, notes that:
Among business and finance leaders Warren Buffett, Bill Gates, Steve Jobs, Chuck Schwab, Michael Bloomberg and Mark Zuckerberg — and former Senator John McCain, the reputations of Bogle, Buffett and Gates are far on top with ratings of 51.7%, 51.3% and 51.0%. Bloomberg and Zuckerberg bring up the rear with ratings of 26% and 19%.
How is Jack Bogle remembered? “Investing in the entire market with low cost index funds is better than stock picking” and “Made investing understandable” are two top phrases that investors choose to describe him.
Investing for the long term and diversifying are two principles Bogle championed that are important to investors (57, 53%). Vanguard investors agree, more so (70, 64%).
A majority of the investing public reports being knowledgeable (somewhat, very, extremely) with index funds (59%); Vanguard investors are more familiar (75%).
The investing public rates Vanguard highly (41%) compared to Charles Schwab (32%) and Merrill Lynch (25%). Berkshire Hathaway rates at 47%. Vanguard investors rate Vanguard (73%) far above Berkshire Hathaway (43%), Charles Schwab (22%) and Merrill Lynch (16%).
Knut A. Rostad, president of the Institute for the Fiduciary Standard, said: “After exiting Vanguard, Jack Bogle spoke and wrote volumes on investing and serving investors first for 19 years. His voice resonated with many, including former President Bill Clinton, former Federal Reserve Board Chairman, Paul Volcker, and Warren Buffett. Scholars and regulators embrace his principles and applaud his investor advocacy. This survey shows that many ordinary investors do too.”
The survey was conducted by Rockland Dutton Research for the ‘Friends of Jack Bogle’, and polled 500 Vanguard investors and 500 non-Vanguard investors with $100,000 or more in investable assets.
Chip Roame, Tiburon Strategic Advisors chief and consultant to financial services executives notes, “I was particularly struck by the increased focus of 40% of general investors who recognize the value of minimizing costs as the number one driver of long-term performance. Among investors who knew Jack, it’s 67%. This is legacy impact.”
Jeff Rosen, President & CEO of the National Constitution Center says, “Jack Bogle was revered by so many who followed or worked with him. It’s wonderful to see how brightly his legacy shines among the millions of investors who also knew him. “Made investing understandable” is just one phrase that Americans associate with Jack. His calm and steady wisdom will continue to guide investors for generations to come.”
