How has Vanguard become one of the largest active managers globally?

Kunal: I mean Vanguard has a huge history as you mentioned in active, we’ve been managing active fixed income funds since the eighties and what we've been building behind our active funds. We have the one of the largest active fixed income teams. We have global teams, where we have over 130 managing active fixed income. These are actual sector specialists. We have teams dedicated to high yield, European investment grade. US investment grade. Asian investment grade, structured credit, emerging markets, active rates. We have teams that are based globally to help us manage and trade the best bonds globally at the best prices leveraging Vanguard size and scale.

Today, we manage approximately over 560 billion in active management and that puts us in the top three of global active fixed income managers. In addition to the portfolio management team, we have a whole team of global research analysts that's it in the regions that they cover their issuers. So, our European team that covers European issuers, like Duetche Bank for example, sit in Europe, our Australian team that covers the central bank of Australia sits in Australia and we have a US team. We're covering global credits across the landscape.

And why that’s so important for Vanguard is, number one, we're not trying to manage global credits from one region. Within our process. We want to make sure we are meeting the management. We are engaging with countries and companies to understand what their strategies are. Because often Vanguard has a very good relationship with many of these investors because we own typically 5% of their company. We have very good relationships. Very good access to management that allows us to make sure that we can sufficiently research a name and add that value back to investors.

Now you mentioned what makes us different. What makes us different in Vanguard is very much a because our team is so broad and fast and geographically dispersed, it allows us to really focus on what we are good at, security selection. We believe that macro and using macro to generate alpha, can often lead to one, high levels of risk taking relative to very low levels of return. Why? Because it's very difficult to beat the Fed. It's very difficult to beat the central banks. We're not trying time huge amounts of rates and huge amount of currencies. What we are trying to do is, one, pick the best value securities, which are typically strong fundamentally. But also very much that we believe that we can generate alpha.

Alpha, is the critical word here. In this environment. It's very easy, especially environments of low yields and higher yields and moving yields of having an investment grade benchmark and taking significant levels of risk lent relative to their benchmark. So if you take 30-40 percent of high yield and your benchmark is investment grade. Ultimately, you're just taking more risk than the index. So of course, you should outperform because you're taking on more risk, but it also means that if you're taking more risk and you're in a bear market, your drawdowns are significantly higher.

Vanguard aims to manage investors’ money in a more predictable fashion. Our investment grade fund. Should behave like an investment grade fund and we are trying to avoid taking leverage, big risk trades. We're trying to avoid concentrated and correlated positions and we're there to generate consistent long-term alpha and that consistency comes from picking the best idiosyncratic stories, across Vanguard's coverage universe.