Andy Clarke and Nelson Wicas: Index Funds Aren’t Really Passive, And Other Lessons for Building a Better Portfolio

**SPEAKER_1** (0:00)
Lots of firms throw a couple flashy funds your way and call it a day, but not Vanguard. Vanguard bonds are institutional quality. Institutional quality isn't a tagline, it's a commitment to your clients. It means top-grade products across the board. So if you're looking to give your clients consistent results year in and year out, go see the record for yourself at vanguard.com/audio. That's vanguard.com/audio.
All investing is subject to risk. Vanguard Marketing Corporation Distributor.

**SPEAKER_2** (0:27)
Please stay tuned for important disclosure information at the conclusion of this episode.

**Amy Arnott** (0:33)
Hi and welcome to The Long View. I'm Amy Arnott, Portfolio Strategist for Morningstar.

**Christine Benz** (0:39)
I'm Christine Benz, Director of Personal Finance and Retirement Planning for Morningstar.

**Amy Arnott** (0:44)
Our guests on the podcast today are Andy Clarke and Nelson Wicas, co-authors along with Ganesh Suntharam of the new book, The Architecture of Wealth, The Art and Science of Portfolio Construction. Andy has spent more than three decades as an investment researcher and writer. He has worked at Morningstar and Vanguard, where he served as assistant to Vanguard founder and indexing pioneer, John C. Bogle.
Andy has published research in practitioner journals such as the Journal of Index Investing. He is the author of Wealth of Experience and a CFA Charterholder.
Nelson has developed and managed quantitative equity strategies for more than 30 years. Most recently, he worked at Redpoint Investment Management, where he was a founder and research analyst. After completing his PhD in economics at the University of Pennsylvania, Nelson joined Vanguard to help establish its quantitative equity management function. Nelson later helped found Vanguard's Investment Counseling and Research Team to produce portfolio construction insights for clients and internal teams. Nelson has been a visiting professor of economics at Haverford College in Haverford, Pennsylvania. Andy and Nelson, welcome to The Long View.

**Andy Clarke** (2:07)
Thank you. Great to be here.

**Amy Arnott** (2:10)
Well, so as I mentioned in the intro, you have co-authored a new book, The Architecture of Wealth, along with your third co-author, Ganesh Suntharam. And I'm curious if you could tell us a little bit about the idea for the book and who the target audience is.

**Nelson Wicas** (2:30)
The book was motivated by a course that I taught at Haverford College.
And it has antecedents in work. When I first was hired at Vanguard in 92, I was asked to create an investment course for the business executives at Vanguard, which I taught for several years. And then later, I traveled around the world presenting Vanguard's portfolio construction ideas and strategy ideas. So I had that content and I was leveraging that for the course. And then the case studies for the course come from work I've done with Ganesh Suntharam because he and I worked here for 12 years. So all the case studies are actually based on strategies we built and portfolios we ran or projects we did for particular clients. And then my connection to Andy is Andy and I worked together closely from 2002 to 2007 at Vanguard creating Vanguard's first iteration of their institutional thought leadership program. And Andy helped write the white paper series.
And he taught me a lot about writing in the process. So I know from working with Andy, he's super talented at creating very accessible content no matter how complex the investment ideas are. So when it came to writing a book, I was interested in providing the intellectual rigor you'd have in a sort of serious academic textbook, but I wanted it to be very accessible. And so that's why I reached out to Andy to see whether he'd have time. And initially he was busy on other projects, but he said, come back to me in a year. So after going through teaching the course a second time, I reached out to him and I think in a moment of weakness, he said, oh, I do have time. So we all created time in our schedules and ran at it. And I have to say Andy kept us moving along at a good pace. Everyone who's talked to me is like, you got this done in six months? And they're like, that's super fast. I'm like, Andy kept us moving. So, you know, it was fun to do. And my writing skills have improved tremendously from working with Andy.
And so in terms of, you know, what the target audience is, the target audience is like undergraduates, MBAs, financial planners, serious investors.
And then in terms of where the book is targeted, like there's a lot of great books out there, like from Bogle and Malkiel and Swenson. And there's also all these really great academic books, such as, you know, McGinn and Tuttle and Bodhi K. Marcus and Caballon McKinley. And so what we're trying to do is take the intellectual rigor from those Caballon McKinley type books and Bodhi K. Marcus, and make it as readable and accessible, but more comprehensive than say, the Bogle books are or Malkiel's book or Swenson's book. And so that was the goal and that was the target audience.