I really can't stress how highly I reccommend this interview if you are interested in the finance industry. John founded the first index fund after noticing that the stock market invariably outperforms managed funds after fees are taken out. The same is true today, and the Vanguard group manages around 750 billion dollars with fees around 0.2% (an order of magnitude less than average managed fund fees). Truly inspiring guy.
I couldn't help but wondering after listening to it whether there could be potential for a startup here. It would require a lot of connections in the finance industry and a significant amount of capital, but there's a clear path to profitability and only two real metrics - getting people to trust you (require some kind of insurance?) and keeping costs low. Just how cheap could you make something that maintains an index portfolio?
My other thought was maybe he could offer 'fund x + 0.2%' packages - something that tracks the performance of a specific managed fund, after fees, and tacks on a bonus 0.2%. That would be a cool hack that in the long term you could make a significant amount of money from, but there's always the potential that a fund will do exceptionally well in the short term. Food for thought anyway.
I couldn't help but wondering after listening to it whether there could be potential for a startup here. It would require a lot of connections in the finance industry and a significant amount of capital, but there's a clear path to profitability and only two real metrics - getting people to trust you (require some kind of insurance?) and keeping costs low. Just how cheap could you make something that maintains an index portfolio?
My other thought was maybe he could offer 'fund x + 0.2%' packages - something that tracks the performance of a specific managed fund, after fees, and tacks on a bonus 0.2%. That would be a cool hack that in the long term you could make a significant amount of money from, but there's always the potential that a fund will do exceptionally well in the short term. Food for thought anyway.