Fran Kinniry – The Comfort of Paradox at Vanguard Group (Capital Allocators, EP.173)

Capital Allocators – Inside the Institutional Investment Industry

Ted Seides – Allocator and Asset Management Expert

Investing, Capitalallocation, Business

4.8 • 806 Ratings

🗓️ 18 January 2021

⏱️ 64 minutes

🔗️ Recording | iTunes | RSS

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Summary

Fran Kinniry is a twenty-three year veteran at the Vanguard Group, where he’s led the teams that spearhead Vanguard’s research into new products. Fran helped Vanguard enter the direct advice business, developed Vanguard’s Advisor Alpha concept, started its Investment Strategy Group, and most recently heads Vanguard’s latest initiative investing in private equity.

Our conversation covers an overview of Vanguard business, Fran’s three roles over a quarter century at the firm, behavioral coaching, and the firm’s foray into private equity. We discuss the research process leading to the introduction of private equity, potential scale across institutional and retail clients, timing of the decision, fees, and manager selection. We then close discussing Vanguard’s cooperative ownership model, compensation, and the future of index fund.

When the industry’s leading index fund manager known for low-cost investing steps into high-cost private equity after years of research that showed the benefits of the asset class, those calling for the abandonment of active management should take notice. Like all other practitioners in active management, Fran and Vanguard preach outcomes over costs.

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Transcript

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0:00.0	Hello, I'm Ted Sides, and this is Capital Allocators.
0:10.1	This show is an open exploration of the people and process behind capital allocation.
0:16.3	Through conversations with leaders in the money game, we learn how these holders of the keys to the
0:21.7	kingdom allocate their time and their capital. You can keep up to date by visiting
0:26.8	Capital Allocatorspodcast.com. My guest on today's show is Fran Canirey, a 23-year veteran at the Vanguard Group, where he's led the teams
0:40.1	that spearhead Vanguard's research into new products.
0:44.3	Fran helped Vanguard enter the direct advice business, developed Vanguard's advisor alpha concept,
0:51.2	started its investment strategy group, and most recently, has headed Vanguard's latest
0:56.4	initiative investing in private equity. Our conversation covers an overview of Vanguard's business,
1:03.5	Fran's roles over a quarter century at the firm, behavioral coaching, and the latest asset class
1:09.8	foray.
1:15.8	We discussed the research process that led to the introduction of private equity, potential scale across institutional and retail clients, timing of the decision, fees, and manager
1:22.4	selection.
1:23.5	We then closed discussing Vanguard's cooperative ownership model, compensation, and the future of index funds.
1:31.2	When the industry's leading index fund manager known for low-cost investing steps into high-cost private equity after years of research,
1:40.6	those calling for the abandonment of active management should take notice. As you'll soon hear,
1:46.1	like all other practitioners of active management, Fran and Vanguard preach outcomes over costs.
1:53.5	Please enjoy my conversation with Fran Canirey.
1:59.2	Fran, great to see you.
2:01.9	Great to see you, Ted.
2:02.7	Thanks for having me.
2:07.9	Why don't we start with your entrance to Vanguard 20-something years ago?
	...

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