Vanguard’s new CEO eyes fixed income offering expansion

By Davide Barbuscia

NEW YORK (Reuters) – Vanguard’s new chief, Salim Ramji, said on Wednesday that he plans to expand the fixed income offering of the U.S. top asset manager given the market’s size and opportunities.

Ramji said that there was an opportunity to take “the same mindset” Vanguard has brought the equities market to the fixed income market.

“Our clients can benefit from that type of mindset. … They can get better and better quality fixed income exposure,” he said at the Financial Times’ Future of Asset Management North America conference in New York. “It goes back to our sense of mission and purpose around how you reduce costs and give people a higher quality set of exposures.”

Vanguard, with about $9 trillion in assets under management, is the world’s second-largest asset manager after BlackRock (NYSE:BLK).

Ramji, who became Vanguard’s chief executive officer in July, replacing Tim Buckley, joined the Malvern, Pennsylvania-based firm from BlackRock, where he was responsible for two-thirds of the firm’s assets and growth.

The two firms are the largest providers of exchange traded funds (ETFs) – low-cost products often aimed at retail investors as a cheap way to invest in the world’s biggest markets.

Fixed income markets have experienced severe volatility over the past two years as a rapid succession of hikes in interest rates across developed markets has hit bond prices and boosted yields. At the same time, higher yields have attracted hefty inflows into the asset class.

“When you look at the macro environment for fixed income today , relative to say 10 years ago, it has a really important place,” said Ramji. “It’s going to be more important based on … our views of the long-term rate environment,” he added.

Ramji said he was also looking at opportunities in private markets, a sector that includes debt and equity that is not publicly traded or listed. “In privates we’re open to exploring partnerships,” he said.