Selecting Index Funds: Just Look at Expense Ratios or Is There More to Consider?

With Guest
Marty Kleppe, CFA
Head of Index Investing,
Vanguard

Martin Kleppe is the Head of Index Product Management in Vanguard Portfolio Review Department, where his team is responsible for conducting surveillance of competitor products and positioning, meeting with clients and prospects to discuss Vanguard's equity index lineup, publishing on noteworthy developments in the equity index marketplace and Vanguard lineup, and supporting equity index education initiatives. Mr. Kleppe joined Vanguard in 1989, and joined Portfolio Review in 2003. For the majority of his tenure with Portfolio Review, Mr. Kleppe was a senior member of the Product Strategy team, which is responsible for researching, designing, and launching new funds; monitoring the health of the existing fund lineup; researching, proposing, and implementing changes to the existing fund lineup; and coordinating these functions across five global jurisdictions.

 

In 2016, Mr. Kleppe became the Global SMA Product Manager. His responsibilities included researching and defining the investment capabilities available to SMA (separately managed account) clients and overseeing the various organizational processes needed to support SMAs. He assumed his current role in 2017, and continues to work with SMAs. Mr. Kleppe earned a B.S. from The Pennsylvania State University and an M.B.A. Saint Joseph's University. In addition, he is a CFA® charterholder and is a member of the CFA Society of Philadelphia.

CFA® and Chartered Financial Analyst® are registered trademarks owned by CFA Institute.

Recap, Highlights, and Thoughts

For the last several years a consistent message in the marketplace for retirement plan sponsors, participants and the industry has been the importance of investment fees. The good news is nearly all investment fees have been on a downward trend.  As the cost of many passive investment options approach zero, is expense still the most important factor when evaluating index strategies?  Today, I am happy to welcome Marty Kleppe, Head of Index Investing at Vanguard to share his thoughts.  With the continued popularity of index funds in retirement plans, Marty shares some timely thoughts about index investing is more than just low cost, what securities lending is and the role it plays and finally how there is skill involved in managing index funds.  This was a great conversation and one to definitely stick with to the end as I give Marty the opportunity to respond to some of comments active managers have shared about index managers over the years.

 

Also, Marty and his team put together a white paper on this topic called Beyond Expense Ratio which is a good read.  

Thanks for listening!​​

Sincerely Your Host, 

Rick Unser

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