Follow My Pound

03 April 2019



Hollie-Rose Comer: What happens when you invest a pound in a Vanguard fund?

My name is Hollie-Rose Comer and I'd love you to meet some of our crew who look after your pound. What we've done here is draw up a diagram to connect up some of the people we want to speak to.

The diagram is not an exact plan of our office – but we'll use it to follow the pound as it makes its journey from first coming in to Vanguard to when your investment matures in a few years' time.

Let's look at where your pound's journey starts.

Cathy Denyer O'Leary (Client Operations): My name is Cathy Denyer O'Leary, I am a client operations manager. My team looks after your pound from the moment it first arrives. We provide a safety net, ensuring that Vanguard clients receive the best possible level of service.

Hollie: Your pound is safe and ready to invest let's find out more about those investments. Vanguard will invest your pound either in equities, which are shares in companies, or in bonds, which are a type of loan.

Dave Kirby (Equity Investment Group): Hello I am Dave Kirby, I am a senior portfolio manager working in the equities team. We will invest your pound in line with your choice of fund. This can include UK equities, US equities, European equities, Japan, emerging markets, global equities – there is plenty of choice. The team operates globally and when we invest your pound we'd like to you to be sure that it's doing what you want it to do.

Christie Goncalves (Fixed Income Group): My name is Christie Goncalves, I am a trader in the bond team. We will invest in bonds issued by governments, government agencies and companies. Many of these companies will be the same as the ones in which our colleagues in the equity team buy and sell shares. Shareholders benefit from the growth of a company but bondholders – because bonds are a type of loan – receive interest payments and eventually the return of money originally invested.

Hollie: Okay, your pound is being invested in lots and lots of companies around the world, either buying their shares or loaned to them in the form of bonds. Let's learn a bit more about that.

And the very person to help us out is Alexis Gray, one of our senior economists.

Alexis what kind of companies are we investing in?

Alexis: There's going to be an incredible range. What's happening is that your pound – along with lots of other pounds – is flowing through our economy providing capital to companies that provide the goods and services we all need. From the gas we use to cook and warm our homes, the food we eat, the clothes we wear, the trains we take to work, our education and healthcare, the big internet and technology companies, or maybe the infrastructure needed in developing countries.

Hollie: It's interesting to remember that investment is about helping to provide the real world benefits that we all need and enjoy. But investing does mean risk, doesn't it?

Alexis: The amount you invest will be constantly changing in value, and you might not always get back what you put in. We want your pound to increase, to grow, to become two pounds or more, but to have that potential for growth, you do need to accept a degree of risk.

Hollie: Alexis, thank you. Let's look at how we deal with risk at Vanguard. We have two risk teams, investment and operational. Let's meet them.

Andrew Hedley (Operational Risk): Hi my name is Andrew Hedley. I lead the operational risk team and we're responsible for managing the mechanics of the trading process. We ensure every step of the trade is properly conducted. Arran can talk you through Investment Risk.

[On hearing his name Arran turns around and faces the camera, we move in so that we can only see Arran MCU]

Arran Pierson (Investment Risk): I am Arran Pierson, Investment risk focuses on ensuring the fund that your pound is invested in is doing what it's meant to do. For example, if it's invested in a UK equity index fund we ensure it is following the index correctly.

Hollie: We now know where your pound has gone and who's keeping it safe. At Vanguard, we're dedicated to helping you to investment success. I hope this short video has helped you better understand your pound's journey.

Investment risk information:

The value of investments, and the income from them, may fall or rise and investors may get back less than they invested. Past performance is not a reliable indicator of future results.

Other important information:

This video is designed for use by, and is directed only at persons resident in the UK.

It is for information purposes only and is not a recommendation or solicitation to buy or sell investments nor does it constitute legal, tax, or investment advice.

The opinions expressed in this video are those of the participants and may not be representative of Vanguard Asset Management, Limited.

Issued by Vanguard Asset Management, Limited which is authorised and regulated in the UK by the Financial Conduct Authority.

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