How will investing change over the coming decade?

Christine Kashkari: Advancements in AI, new approaches to product development, and growing interest in private markets are transforming the investment landscape. 

We'll discuss the impact of these trends and more with Vanguard's president and chief investment officer, Greg Davis. 

Welcome to Season 2 of “Better Vantage by Vanguard,” a podcast series hosted by Custom Content from WSJ and Vanguard. 

I'm your host, Christine Kashkari, Editorial Director at WSJ Custom Programming, and with me today is my co-host and our resident expert, Joe Davis, global chief economist at Vanguard. 

Joe Davis: Great to be here, Christine. 

Christine: Joe, I do love the sound of that, Season 2. 

Joe: Well, let's see how this goes. 

Christine: Well, we are thrilled to have with us in our inaugural episode today the president and chief investment officer of Vanguard, Greg Davis. Greg, thank you for joining us. 

Greg Davis: Great to be here with you guys. Looking forward to it. 

Joe: This is actually a really special episode for me, and I think it'll be for our listeners. So I've had the privilege and true honor of working with Greg for well over a decade. Greg is the most humble, yet one of the most accomplished investment leaders that I've known in the industry, and I've been in industry a long time. So, he'd be too humble to say, just in the fixed income Hall of Fame, so, he's got a perspective, listeners, in terms of his dual role of seeing a perspective on the markets, on the investments of the financial services industry with regulators. So, there's a lot of informed opinions out there, but what Greg says, I think, really bears listening to. And so that's why I'm really excited today. 

Greg: Thanks for those kind words, Joe.

Christine: And we are looking forward to getting into all of those topics, but first, Greg, you've been at Vanguard for 26 years. You've been through all sorts of economic and market cycles. How would you describe where we are today? 

Greg: I think, we're at a place now where there's a lot of concern around the disruption that might come from AI, right? We're seeing that in terms of volatility in the marketplace. We've seen new investment instruments that have, popped up over the last several years, when you think about the crypto space and things of that nature. 

But what we always try to tell our investors: the long-term tried and true ways of investing, stocks, bonds, investments in cash, those types of things that actually produce real income streams are things that we continue to make sure our investors are gravitating toward versus being consumed by speculation and those types of things that get a lot of headlines in the marketplace, but we don't think it's well suited in a portfolio.

Joe: So maybe we'll dig into some of that, Greg. Let's talk about what perhaps you're most excited about. 

Greg: We're at a place now where technology is expanding in leaps and bounds. So when you think about: We've seen the evolution of the personal computer in our lifetimes, right, and the impact that that's had in terms of being a general-purpose technology. We've seen, the impact of having a personal computer in your pocket. 

And then when you think about artificial intelligence in general, the power of what it can do and the impact it can have in terms of how it helps people do their jobs better than they do it today — and we think about it more from, “Hey, it's going to be something that helps augment how we work versus replacing what we do.” 

Joe: Interesting, so technology is the angle, right? 

How about then on the other side; kind of shake your head a little bit. I'm not hearing you call people out, but, what do you say to: Is that why this is going a little too far? 

Greg: Look, when people start to gamify investing, when you think about people being rewarded with balloons and fireworks for trading, which we know is like: The more you trade, the worse off you're going to be in the long run. 

I remember joining this industry back in 1998, and this was during the dot-com era,
so anything with dot com behind it seemed like it was going to the moon. 
The good news is that I didn't have a lot of money back then, so I lost money, but it wasn't much to lose. But, it teaches you a lesson that there's a big difference between investing and speculating. 

That type of behavior back in the dot-com era was really speculation, and what I get concerned about is that people run towards asset classes like crypto and other things that have more of a speculative bet to it versus a true investment merit.  Maybe I'm wrong, but I would caution investors to truly think about: What are they investing in long term? Does it have enduring value? And how do you assess the value? 

And I think in some of these instruments, it's really difficult to assess what the true intrinsic value is. 

Christine: So Greg, when you talk about the dot-com era and now we're in the AI era, where do you see the parallels begin and end? 

Greg: Some of the parallels are really about the feverish uptake in terms of “these things are going to go to the moon,” and maybe some will, maybe some won't. There were some success stories back in the dot-com era, and a lot of companies went out of business, and you're very likely to see something similar in this space. There's going to be some true winners, and there's going to be others that just end up not getting the traction that we would expect. I'd say the biggest difference though: These companies actually make money. 

But you do have to wonder, well, how many of these will be in the marketplace five or 10 years from now? Is the market going to gravitate to one or two winners versus having many more than that? 

Joe: That's a big open question as you said, Greg: Who’s going to monetize the AI effectively, even if it is the general-purpose technology? 

If you're looking out over the investment landscapes and if you had to take a risk outside owning the market, where would your inclination be the next five or 10 years? 

Greg: You think about value stocks and things that nature—places where the technology isn't fully baked in yet, and you're going to see real productivity and efficiency gains because it's starting to use the technology more fully. 

I think those are going to be areas that you could actually see that segment of the market outperform some of the technology space where there's a lot of hype and a lot of good news already priced into the marketplace today. 

Joe: Interesting.

Christine: So, Greg, let's pivot a little bit. Indexing changed the investing game 50 years ago, giving millions access to low-cost, highly diversified options. Are we at another inflection point, especially considering we're seeing the increased interest and access to private markets? 

Greg: Yeah, I guess the best way to describe is when Jack Bogle was thinking about the index fund, which we started for personal investors back in 1976, it's been one of the greatest inventions when it comes to people investing for their futures, retirement, college education, safety nets, all those types of things. And, $10,000 that was put in the S&P 500 back in 1976 would have grown to $2.1 million. *

So when you just think about the impact of compounding, diversification, and those types of things, it's been a powerful force when it comes to wealth creation and access, at a very low cost. 

Jack Bogle would always say, “Stop looking for the needle in the haystack, buy the whole haystack.” Well, the haystack now includes private companies, because if you look at the marketplace, 86% of companies that have revenues greater than $100 million are private.**  So, unless you're invested in a private market, you don't have access to that income stream and that growth potential. 

So, we think it's really valuable for clients to have exposure to it, but that comes with a couple caveats. Caveats: You have access to top-tier managers, and you can try to do it at a relatively lower-cost fee. It's hard to get access to top-tier managers, and the fees in that space are much more expensive than what you find in the public markets. But our goal would be to continue to try to put fee pressure in place, so our clients get a better deal longer term, as we provide offerings in that space down the road. 

Christine: So how do you do that? 

Greg: Well, part of it is negotiation. In order for it to be successful longer term, there has to be a change in terms of the pricing. It has to become less expensive than it is today in order for more people to have a meaningful holding in their portfolios. 

The other component is, it's still complicated to find and get access to top-tier managers. 

Joe: Liquidity too?

Greg: Correct. And it's not the right thing for everybody. You have to be willing to hold these investments for longer periods of time. So for somebody who's looking for something they're going to invest in for next couple years, this is not it. 

But if you think about retirement plans where people are saving for a 30- or 40 year retirement journey, and they're investing over that long time horizon, privates could make a lot of sense in that type of environment.

But again, I'd go back to you want to see fees come down over time, and ultimately you want to make sure you have access to really good managers. 

Joe: That's helpful.  So not just any manager, it's just an asset class, and I’ve got to have 20%. 

Christine: So in terms of trends, do you see this trend lingering of, as you said earlier, more private companies opting to stay private when, and at the same time, the number of public companies like since 2000 is down 36%.*** Is that the trend that you foresee going on and why? What are the circumstances? 

Greg: I think there's a couple things going on. One is that, the regulatory burden associated with being a public company, the fact that you have quarterly earnings calls and all those types of things, create some frictions that, in the past where you were willing to take those frictions because it was the only way for you to raise money. 

Now there's plenty of money out there in the private equity market where you can avoid going down that regulated type of route, and you get all the capital you need. 

And you've seen, many, many large deals that get done in the private markets. And you're also part of an ecosystem where some of these large private equity firms, they've created structures where they know how to help create more value for these companies. They have the ecosystem around marketing, strategic advice, all those types of things, operational experience that can help take a company that's here today and get them to a much higher level of valuation over time. 

Joe: Now I'm going to go somewhere only because you mentioned it, Greg, for the record, it's going to be crypto. Maybe just walk some, there's different dimensions, and sometimes I just hear it as one word: crypto. 

Greg: So I'd say at the fundamental of when you think about the technology behind crypto blockchain, we think that is actually really remarkable technology in terms of what it can do regarding the rails in the financial services industry, in terms of reducing costs, increasing the speed of collateral movement and those types of things. 

When it comes to tokenization of different types of assets, in my mind, the place that would have the most impact would actually be in the less liquid spaces, but we haven't really seen much of that. There hasn't been much of an uptake. 

If you were a commercial real estate investor, wouldn't it be great to have a tokenized building, and you could very easily get liquidity.

Joe: Or a little portion of the lease? 

Greg: Exactly, that's exactly right. 

Christine: So Greg, let's switch gears a little bit and talk about the engine that keeps all of this running: the talent.

Greg: We've always been a place where we tried to groom and develop talent internally. But what we've done over the years, and we've also supplemented that quite a bit with external talent in places where we were trying to build out new expertise that we didn't have before.

And I can give you prime examples, we've done that in our quantitative equity group by bringing in some outside managers who had tremendous experience outside that we thought could be really additive to how we how we manage portfolios. 

We've seen that on the fixed income side, when we started to get into emerging markets because we were able to identify and hire a very talented manager from the outside. That ended up expanding into a deeper research team, it ended up turning into a global team. 

Then we've also done a number of things by partnering with firms like Girls Who Invest and other programs like that to help us get more young talent in the doors that have different life experiences and perspectives that can help us add value for our clients. 

Joe: Just to follow up on that point, Greg, part of your talent strategies, and your role, you are assembling or overseeing winning investment teams at a high level. You also have the responsibility—global investment committee—hiring or perhaps letting go teams that either have those characteristics or in your judgement, your peers’ judgement don't have those characteristics. So how do you cultivate that environment? Because that's rare. You're talking about winning against a lot of smart competitors. Anything that you've learned, anything that you go to day-to-day—these are non-negotiables in your mind? 

Greg: Yeah, I think a big part of it, Joe, goes back to the culture of Vanguard. We are a client-first organization. At the end of the day, you want folks who ultimately have a very strong client focus and their focus on team. So, it's a cultural thing. 

In our industry, there's lots of folks who want to be the star. “Look at me, look at me, look what I've done.” That doesn't resonate here. It never has, and hopefully it never will. 

And the goal is really about building teams that are collaborative, with a focus on doing what's right for our clients, making sure they're helping the people around them get better. And they operate in a very collaborative way. 

And, I've worked on Wall Street, and that's not the normal way of how business gets done. And we know every day we come in, and we help people live better lives from the standpoint of helping them save for retirement, save for the kid’s college education or their emergency funds. But it's something that we're very, very proud of. 

Christine: When you talk about bringing in or growing talent, this is a critical thing, and we've talked about this across the show, how you get younger people engaged and interested in investing, not just for their own financial futures, but as a career. 

Greg: We've done something, this started maybe 10 years ago. We had, bring your daughters to work, because we know that women were unrepresented in this industry. And then we changed it to bring your kids to work to broaden it out, but, giving kids exposure. 

Like, there's people that look like me that are in these types of roles and the jobs are actually kind of cool and interesting. But then there's a lot of partner organizations out there, Girls Who Invest is one, Diamonds another. We invest and partner with a number of other groups that are focused on kids who are trying to get exposure, because they haven't, to this industry. And it's been a really powerful thing to attract talent that has historically been underrepresented in this industry, and it's been great to see.

Joe: Greg, in your role, you’re asked a lot of questions. So what's the one question that you're not asked enough about? 

Greg: I would say: How do we continue to broaden out the wealth creation in the country? And my answer to that is really around financial literacy and education. The things I'm really passionate about is, I've seen the personal benefit, as well as the benefit for my kids and others, how much education matters. 

Education is not equally distributed across the United States. So, giving kids equal access to education, those types of things. I think that's just an opportunity for us as a society to do a lot more. 

Christine: As a child, did you have any exposure to investing? 

Greg: No. So, I come from a blue-collar military family, and so the exposure is more to saving versus investing. There's a big difference between the two. 

So, instilling the value and the importance of investing and the importance of compounding over time. And once people understand the power of compound interest, the light bulb goes off, “Wow, I can put in this amount of money every month and it turns into a really big number 20, 30 years from now!” That's something that kids should be learning about when they're in high school and middle school. 

So as soon as they start earning any type of income, they can take advantage of investing for the long run because that compound growth is hard to catch up if you missed 10 or 20 years early on in your career. 

 
Joe: You sit in a very big job. So, this is for the listeners. If they  want to be sitting in your chair what would be some guidance or what are perspectives for them? 

Greg: It can look glamorous to get to a certain spot, but there was a lot of hard work in ebbs and flows that happened along the way. There's multiple ways to ultimately get there. But, I can speak for me and hopefully for Joe, we've been very fortunate to have found Vanguard 20-plus years ago, both of us, and been surrounded by great people who've had tremendous impact in terms of our career and giving us jobs that we probably weren't qualified for at the time. But we tried to make the most of the opportunity not to disappoint them. 

Christine: They saw the potential and you lived up to it.

Greg: Tried to, tried to. 

Joe: Well, the hard work, at least what I’ve learned, put you in the conversation, but someone still had to take a chance. 

Greg: That's exactly it. 

Joe: They could have hired someone else. 

Christine: Thank you for opening our Season 2 for us. 

Greg: Well, I appreciate you inviting me on, and thank you so much.

Christine: And thank you so much for joining us today. That's it for today's episode. Please join us again for all the upcoming episodes in Season 2 of Better Vantage by Vanguard. 

If you enjoyed this episode and found it helpful, subscribe and share. 

Notes:

*Source: Vanguard data from 1975-2025.

**Source: Vanguard data, as of 2023.

***Source: Mackintosh, Phil, and Michael Normyle, "Public Markets Are Key to the U.S. Economy", NASDAQ, April 24, 2025.

Disclosures:

All investing is subject to risk, including the possible loss of principal. Diversification does not ensure a profit or protect against a loss. Bond funds are subject to the risk that an issuer will fail to make payment on time, and that bond prices will decline because of rising interest rates or negative perceptions of an issuer’s ability to make payments. Investments in stocks or bonds issues by non-U.S. companies are subject to risks including country/regional risk and currency risk. These risks are especially high in emerging markets.

Past performance is not a guarantee of future returns. The performance of an index is not an exact representation of any particular investment, as you cannot invest directly in an index.  

Trading in cryptocurrency ETFs and mutual funds may involve significant risk and may not be suitable for all investors. 

Private investments involve a high degree of risk and, therefore, should be undertaken only by prospective investors capable of evaluating and bearing the risks such an investment represents. Investors in private equity generally must meet certain minimum financial qualifications that may make it unsuitable for specific market participants.  

Vanguard is owned by its funds, which are owned by Vanguard’s fund shareholder clients.