The art of being in the Vanguard

Asset management companies don’t get much bigger than Vanguard. The group, which recently turned 40, offers more than 345 funds around the world, with approximately $3.5 trillion in assets under management as of end of March 2016. That kind of size involves dealing with massive foreign exchange exposures, a task so big that Vanguard created a global team to handle FX trading. The head of those operations is Andrew Maack, who spent some time with our reporter Adam Cox to talk about how algorithmic trading helps him do his job and how such a large fund group like Vanguard goes about generating the smallest footprint possible.

AC: I’d like to start by asking a little about your role and what you’re focused on? AM: Anything we do here at Vanguard we want to make sure we have an emphasis on minimising the cost to our shareholders. And we take that approach regardless of asset class-- whether it is equities or fixed income products or FX, we look at our orders holistically and make sure we’re managing the risk and also the cost of execution appropriately. AC: How do you go about doing that? AM: The most important thing we’ve done to manage the FX markets is open a trading desk in each of our trading locations—Melbourne Australia, London and here in Pennsylvania with full-time FX traders in each. With our global team in place, we look at the orders coming in on an aggregate basis and at the benchmark and based on those two factors we decide which time zone is the most appropriate to trade those orders in. We have the ability to trade at optimal liquidity windows in the market. AC:  You...continued

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