Vanguard Funds & Garmin

By: Robert F. Abbott, author of Big Macs & Our Pensions: Who Gets McDonald's Profits? the book that explains the connection between the retirement income of the middle class and the profits of big business

Wednesday, February 19 2014

Do you contribute to a Vanguard fund, or belong to one indirectly? Many millions of us, from many different countries, do. Vanguard Group, Inc., operates 170 different mutual funds and ETFs in the United States, and more internationally. Altogether, these funds manage some $2 trillion (that's trillion, with a capital T), a massive amount of money by anyone's reckoning.

It is also the largest of 359 institutional investors in Garmin Ltd., the company we know best as a GPS provider ("Turn left, you missed your turn, recalculating!"), although it has a number of related products and services. About 47% of Garmin's shares belong to institutitional investors (pension funds and mutual funds).

The Swiss-based company reported its fourth quarter and fiscal 2013 results this morning. Here's what's called the Executive Overview, from a company news release,

“With strong fourth quarter revenue growth in outdoor, fitness, aviation and marine, we generated record annual sales in those segments,” said Cliff Pemble, president and chief executive officer (CEO) of Garmin Ltd. “In the fourth quarter, we also achieved operating income growth in all five segments. This success serves as a solid starting point for 2014 and highlights the strength of our diversified product portfolio. We are excited about the future and the numerous new categories Garmin will serve.”

Vanguard represents an interesting case in our exploration of the Ownership Revolution that saw the middle class become the owners of much of big business. Not only does the Vanguard Group provide vehicles for investing, but it's also owned by the same investors. So, if you invest in a Vanguard fund, you're also investing in the Vanguard company which manages the fund.

The Bigger Picture:

Will Profits from Big Macs Add to Your Retirement Income?

In 1948, the McDonald brothers redesigned and remodelled their drive-in restaurant in San Bernardino, California. Taking inspiration from Henry Ford's assembly-line, they created the fast food revolution, with the quick service and low prices we now take for granted.

In that same year, the U.S. National Labor Relations Board ruled unions could include pension issues in contract negotiations. That ignited a massive expansion of pension plans.

In the 1950s, pension funds started buying stocks, rather than just bonds or their equivalents; in addition mutual funds came of age. With these two developments working, middle class people became owners of big business. At first, their stakes were modest, but steadily growing.

And in just a few decades, they gained controlling interests in many large corporations through their funds. Management guru Peter Drucker has called it, "...one of the most startling power shifts in economic history."

Now, working people reap the benefits of those investments, collecting much of the profit distributed by McDonald's and other big corporations.

Discover how the pieces fit together. In Big Macs & Our Pensions: Who Gets McDonald's Profits? - a new booklet -(about 25-pages), you will:

• learn more about the McDonald's transformation and its implications for the future
  
• find out how McDonald's makes its profits (and it involves more than selling Quarter Pounders)
  
• meet some of the working people who get McDonald's profits through their pension and mutual funds
  
• find out how low wages became embedded in the fast food industry
  
• hear accusations from critics of McDonald's wages, and
  
• learn who has the ultimate say on fast food wages (the answer may surprise you).

You may not be among the owners of McDonald's. But if you belong to any pension plan, or contribute to a mutual fund or whole life insurance policy, you likely own pieces of some big corporations.

More importantly, though, your retirement income will be bigger and grow more dependably than you would otherwise expect.

Big Macs & Our Pensions: Who Gets McDonald's Profits? is now available at Amazon.com