Duncan Burns has been appointed to succeed Daniel Reyes as the new Head of Investments, Asia Pacific, and a member of the Australian executive team, with a transition of roles expected to be complete by mid-December.

Mr. Reyes, who has served as Head of Investments and Head of Investment Strategy Group for Asia Pacific since 2017, will be relocating back to Vanguard’s headquarters in Malvern, Pennsylvania, to take up the role of Global Head of Investment Product.

Mr. Burns is currently the Head of Vanguard’s Equity Index Group for Asia-Pacific, based in Melbourne. In this role, he oversees the management of Vanguard’s Australian and global equity index portfolios and the firm’s trading operation in the Asia-Pacific region. Mr. Burns will retain oversight of the Equity Index Group in addition to assuming the Head of Investments role.

Duncan brings to the role more than 20 years of equity trading and investment management expertise, focusing on quant active investing, electronic trading, algorithmic strategies, market microstructure and transaction cost analysis.

Prior to joining Vanguard in 2013, Mr. Burns worked for seven years at Jacobs Levy Equity Management, a US provider of quantitative equity strategies for institutional clients. He started his career on Wall Street in 1996, working at Donaldson, Lufkin & Jenrette (DLJ) where he spent several years managing the agency trading desk of DLJ’s retail brokerage arm.

He holds a Bachelor of Arts in Economics from Lafayette College and an MBA from the Yale School of Management. He is a CFA Charterholder and is a member of the New York Society of Securities Analysts.

Alexis Gray has been appointed as Head of the Investment Strategy Group (ISG) Asia Pacific. Alexis is currently a senior economist within ISG, Vanguard’s global research team that serves clients through developing and delivering research that serves as the basis for Vanguard’s investment principles and methodology, guides Vanguard’s global leadership and influences decisions about its investment offerings and portfolio construction.

Prior to her current role, Alexis served as a senior economist for Europe at Vanguard in London. She earned a bachelor’s degree in economics and finance with first class honours from the University of Melbourne, and a Master of Statistics from the London School of Economics.

Ms. Gray regularly serves as an ambassador for Vanguard, speaking at client events and industry conferences on a range of topics, and has authored numerous research papers on macroeconomics and investment issues.

In other changes, Head of Fixed Income for Asia Pacific, Geoff Parrish, will return to the Vanguard Group in the US to take up a new role as Global Head of Bond Indexing in October 2021.

Mr. Parrish will be replaced by Jean Bauler, CFA who joined Vanguard recently following 11 years with HSBC, most recently as Director, Markets Treasury in HSBC Australia. Mr. Bauler brings significant fixed income experience to Vanguard’s existing Asia-Pacific fixed income index group, who manage Vanguard’s portfolio of fixed income index funds and ETFs in the Asia-Pacific region.

Aidan Geysen, Senior Investment Strategist in ISG, will move into a new role as Investment Governance Senior Specialist in the Office of the Superannuation Trustee for Vanguard Super.

Mr. Geysen has played a leading role since 2016 within the ISG team in developing and delivering research insights into portfolio construction, exchange traded funds, and investment markets, and has served as an ambassador and media commentator for Vanguard. Recruitment is underway to replace this role with the group.

These changes form part of Vanguard’s long standing and successful program of rotating senior leadership roles across markets and portfolios, and growing the depth and breadth of experience and expertise within Vanguard’s senior leadership teams.

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The newly published white paper, Making the implicit explicit: A framework for the active-passive decision, outlines a clear process that investors and advisers can follow when deciding how to implement asset allocation across active and index strategies.

The decision-making framework, which was developed by Vanguard’s global Investment Strategy Group, targets four variables to help investors consider when deciding how to implement index, active, or a combination of both, for a given asset class in their portfolio: gross alpha expectation, cost of active management, active risk, and risk tolerance.

“Discussions about active and index investing can draw some strong views from investors and their professional advisers, one way or the other,” Vanguard Australia Head of Investment Strategy, Aidan Geysen, said.

“We see active-passive not as a debate, but as an asset allocation decision, and this framework gives investors a clear process to help them determine the active and index allocations within their portfolio.”

Four variables for consideration

Gross alpha expectation: the expected outperformance of a given active strategy
Cost of active management: management expenses, transaction fees and other costs associated
Active risk: the potential for underperformance by a given active strategy
Risk tolerance: an investor’s tolerance for an active manager’s potential underperformance

The paper highlights that the portfolio construction process begins with establishing an appropriate strategic asset allocation, before the evaluation of active and index products.

Vanguard’s decision-making framework aims to help investors think more deliberately about their expectations and the risks they’re willing to accept, with a focus on how active manager returns can deviate from broad market benchmarks, and how to evaluate factors like conviction, costs and risk in deciding whether an allocation to an active strategy is an appropriate way to implement their asset allocation.

“Investors will invariably have different goals, return requirements, time horizons and risk tolerance, and so whether or not a higher allocation to active is appropriate can differ greatly,” Mr Geysen said.

“In some cases, a higher allocation to active may be appropriate when expected alpha outweighs management costs, when an investor is comfortable with the level of risk being taken, and when the investor has the discipline to stick with an active strategy through periods of underperformance. But an investor can still choose to balance that active risk with an index component in their asset class exposure, accounting for potential underperformance.

“In the end, choosing between active and index isn’t a philosophical decision – it’s part of the asset allocation process. The ideal choice is the one that best aligns with an investor’s unique goals.”

See the full whitepaper.

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