Gus Sauter: Vanguard's Former CIO on Indexing, Active Management, and Private Equity (EP.216)

<p>The indexing revolution is something that underpins all of our work here at the Rational Reminder and is a subject we reference in different ways in almost all of our episodes. Today we have a special exploration of this history, as we welcome Gus Sauter, the former long-time CIO of Vanguard, to talk about his incredible history at the firm, the role he played in the rise of the company, and its huge role in reforming the investing landscape. We also hear from our guest about his experience of working on numerous investing committees since he retired about a decade ago. One of the most notable things about this conversation is Gus' ability to weigh both sides of the arguments about active management, and he does a great job of balancing what he sees as the potential positives of this way of doing things. This is all strengthen by the way he presents these ideas as a powerful mix of stories, evidence, and the research he himself has conducted. To all our listeners, be sure to listen right to the end of the episode, as after the official conversation ends, Gus shared a few more thoughts on Jack Bogle and ETFs as a bonus.</p> <p> </p> <p><strong>Key Points From This Episode:</strong></p> <p>(0:03:49) Looking back at the part that indexing played at Vanguard when Gus started at the company.</p> <p>(0:04:20) The rise of indexing in the subsequent years and the pivotal moments in this process.</p> <p>(0:06:28) Initial ways that indexing was denigrated by Vanguard's competition.</p> <p>(0:08:36) How the narrative changed around indexing when its utility became undeniable.</p> <p>(0:09:10) The role of the University of Chicago in the growth of indexing early on.</p> <p>(0:11:11) Changes in the active management space over the last few decades.</p> <p>(0:12:04) Considering the role of an active manager in today's climate.</p> <p>(0:14:43) Gus' opinion on balancing the strengths of indexing and active management.</p> <p>(0:20:48) Differences between traditional active management and factor investing, and Gus' preference