It's all in a day's work managing US$800b

New York

GERRY O'REILLY wasn't fazed by Brexit. On the Friday morning after the UK voted to leave the European Union, the manager of the world's biggest mutual fund was on the trading floor in Malvern, Pennsylvania, watching numbers flickering on the four screens in front of him. Stocks were down 8 per cent in Europe and 3 per cent in the US. Mr O'Reilly didn't appear stressed. "For what we do, it's not a huge deal," he says. That's because Mr O'Reilly's job at Vanguard Group is to embrace the market, not avoid volatility. Every trading day, he makes sure the US$450 billion Vanguard Total Stock Market Index Fund matches the performance of its 3,600-stock benchmark. That means owning stocks whether they're plunging, surging or unchanged.

Mr O'Reilly manages a lot of money. In addition to running the biggest mutual fund, he oversees the third-largest exchange-traded fund and 16 other funds. Total assets for which he's responsible: US$800 billion. Investors, driven by evidence that even the best active managers have trouble beating the market, have flocked to index funds such as Mr O'Reilly's.