Vanguard picks ETF ace to run $750 billion bond group

Mon Nov 4, 2013 11:31am EST

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(Reuters) - Vanguard Group, the No. 1 U.S. mutual fund company, said on Monday that Gregory Davis, a major force behind the launch of bond exchange-traded funds, will become the chief of its fixed-income group, which has $750 billion in assets.

Davis, 43, will replace Robert Auwaerter, who is retiring in March after more than 30 years with Vanguard, where he oversaw exponential growth in bond assets.

Davis is currently Vanguard's chief investment officer in the Asia Pacific region and director of investments in Australia. He has played a major role in helping Vanguard successfully launch bond ETFs such as the Vanguard Total International Bond ETF. That fund has nearly $700 million in assets since its launch just six months ago, Vanguard's chief investment officer, Tim Buckley, said.

Auwaerter, 58, is credited with playing a major role in taking Vanguard from a bond backwater in the 1980s to a global powerhouse.

"He has a tough record to equal," Buckley said. "He's got that one gear and its full speed."

Before Auwaerter joined Vanguard in 1981, the company had only $1.3 billion in bond assets and they were managed by outside firms. Today, Vanguard's bond division oversees about $450 billion in actively managed funds and about $300 billion more in index and exchange-traded funds.

Auwaerter also has been one of the mentors for Davis, who was in Australia and not available for comment. Davis joined Vanguard in 1999 and previously worked for Merrill Lynch as an associate in global debt markets.

Vanguard said it has $108 billion in Asia Pacific assets, up nearly threefold from $39 billion in 2008.

Buckley said not to expect any immediate big changes at Vanguard's fixed income division.

"I'm a big fan of letting (Davis) get a good lay of the land," Buckley said. "He'll get a few months under his feet and he'll see what works and what are the things where there are opportunities for change."

Davis received a bachelor's degree from Pennsylvania State University and has an MBA in finance from the Wharton School at the University of Pennsylvania.

(Reporting by Tim McLaughlin; Editing by Leslie Adler)

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