Executive Summary: Each year, Vanguard reports how much its portfolio managers have invested in the funds they run. The disclosures are buried, vague and infrequent—but I’ve pulled the data together for you. While a handful of Vanguard-employed managers invest meaningfully alongside shareholders, they are the exception.
Being the managers rather of other people’s money than of their own, it cannot well be expected that they should watch over it with the same anxious vigilance with which (they) watch over their own.
– Adam Smith, An Inquiry into the Nature and Causes of the Wealth of Nations, 1776
When I analyze mutual funds (or, for that matter, public companies, hedge funds or investment advisers and their firms), one of my first questions is: Are the managers “eating their own cooking?”
When I analyze mutual funds, the first question I ask is simple: Are the managers eating their own cooking?
Are they putting their own money in the funds they oversee, or must we trust they’ll look out for our interests without sharing our risks?
Today, let’s answer that question for the 43 Vanguard-employed portfolio managers who manage our funds day-to-day.
Don’t worry. I’ve collected the data on all of the stewards and managers responsible for our money—not just those employed by Vanguard. You can find data for every Vanguard fund and portfolio manager here. For Vanguard’s trustees (the board overseeing our funds), I’ll have an update next week, but if you can’t wait, you can find last year’s update here.
The Disclosure Problem
Vanguard is required to disclose manager fund ownership only once a year, and the information trickles out piecemeal as fund prospectuses are renewed across a mix of fiscal year-ends. Worse, ownership is disclosed in seven broad buckets:
- $0
- $1–$10,000
- $10,001–$50,000
- $50,001–$100,000
- $100,001–$500,000
- $500,001–$1,000,000
- over $1 million
That’s it. No share counts. No dates of purchases or sales. Just a vague range.
By comparison, CEOs and CFOs of public companies must disclose the exact number of shares they own and their trading activity. Why shouldn’t fund managers be held to the same standard?
Vanguard could lead on transparency here. At the very least, it could make its required disclosures easy for shareholders to find. Since Vanguard won’t, I have.
The Vanguard Employee Scorecard
So how do Vanguard’s own managers measure up?