Tim Buckley led meteoric growth at Vanguard, knew when to say 'no'

The announcement of Tim Buckley's retirement as chairman and CEO of Vanguard Group at the end of 2024 brings to a close a storied career that has seen the executive rise from a research assistant to its legendary founder John Bogle to the head of Bogle's firm, which now oversees the largest pool of institutional assets under management in the world.

Buckley, who is only the fourth CEO in the firm's history since its founding by Bogle in 1975, joined Vanguard in 1991 as Bogle's research assistant. He eventually joined the senior executive ranks in 2001 as its head of information technology and ultimately succeeded George Sauter as its chief investment officer on Jan. 1, 2013.

In just more than a decade since Buckley's ascension to the role of CIO, which was followed by his taking the reins of CEO in 2018 and then chairman in 2019, Vanguard Group's growth in assets under management has been extraordinary.

As of Dec. 31, 2012, the day before Buckley's start as CIO, Vanguard had $2.22 trillion in worldwide AUM, of which $1.33 trillion was institutional, according to Pensions & Investments data. Just over a decade later, as of June 30, 2023, worldwide AUM totaled $8.02 trillion, of which $5.63 trillion was institutional, P&I data showed.

Jean Hynes, CEO of Wellington Management, the manager from which Bogle spun off Vanguard and remains a subadvisory partner of Vanguard Group, said in an emailed statement that Buckley has epitomized the kind of leadership to which all in the industry should aspire.

"He is dedicated to relentlessly driving forward exceptional results, focusing on the long term, and always putting client's interests first," Hynes said. "I have and continue to learn from Tim, and I am grateful for his partnership. Wellington will miss Tim, but we know he leaves an immensely capable team in place, and we are confident and excited about the incredible future Vanguard has ahead."

With the announcement of Buckley's impending retirement by the end of the year, Vanguard also announced CIO Greg Davis will have a president title added, along with additional responsibilities. Vanguard will conduct a nationwide search and will consider both internal and external candidates.

"When I think of Tim's legacy for investors and for Vanguard, I think one of the most important things was sharpening the organization's focus on serving individual investors," said Michael Nolan, a Vanguard spokesperson. "Serving individuals through retirement plans is a huge part of that, directly through our direct-to-retail business, and through our advice business that has grown tremendously over the last couple of years."

In December, Vanguard agreed to sell its outsourced CIO business to Mercer.

"That's all part of that focusing on individual investors as well as we can," Nolan said.

Eric Balchunas, a senior analyst with Bloomberg Intelligence, said Buckley has done a really good job carrying Bogle's baton.

"In fact, you could argue he did one of the best jobs, because under his stewardship, assets just about doubled," Balchunas said. "Vanguard led in flows basically in every year he was CEO and they also gobbled up a lot of market share in the ETF arena. Really, he leaned into ETFs big time, and that was smart because ETFs are clearly the vehicle of choice in the 21st century."

"Vanguard and ETFs are a match made in heaven," Balchunas said. "ETFs get the cost pressures from Vanguard, which have been really good for the ETF. Because it attracted a lot of assets, the two of them have done this historical dance to mega-asset growth."

Balchunas said he would also give Buckley some credit for the things he said "no" to.

"They pulled out of China, even though there's a lot of growth there," Balchunas said. "It just wasn't worth the headache. It wasn't really the kinds of investors they were looking for."

Balchunas also said Vanguard's announcement in late 2021 that it was withdrawing from the Net Zero Asset Managers initiative less than a year after joining it was a positive as well.

"Vanguard just isn't a political company and they were getting dragged into politics," Balchunas said.

Another "no" was Vanguard's announcement in January it would not add spot bitcoin ETFs to its brokerage platforms.

Numerous spot bitcoin ETFs, including products from giant competitors BlackRock and Fidelity Investments among others, began trading Jan. 11, the day after the Securities and Exchange Commission approved the product.

"Our perspective is that these products do not align with our offer focused on asset classes such as equities, bonds and cash, which Vanguard views as the building blocks of a well-balanced, long-term investment portfolio," a Vanguard spokesperson said in a Jan. 11 email.

Despite the firm's seeming rejection of bitcoin and cryptocurrency, the firm does appear to be dipping its toe into artificial intelligence. Buckley recently said generative AI will revolutionize the asset management industry and produce better long-term outcomes for clients.

"What we're suddenly discovering with generative AI is there are a lot of cognitive things that we do that are actually fairly routine," he said at a May 2023 Investment Company Institute Leadership Summit in Washington. "So you're going to go through this revolution of suddenly all those routine cognitive tasks, those will be automated."

He referred to this moment in time as an "inflection point for our business, for all businesses" and likened AI's potential impact to the internet. It was revealed in February that Vanguard has been using machine learning across several active stock funds with a combined $13 billion in assets under management. The manager added AI to four factor-based funds early in 2023, betting that new linguistic and data-analysis capabilities will help systematic strategies adapt to changing economic and market conditions.