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There's Still One Safe Place to Invest: Vanguard CEO

Exchange-traded funds (ETFs) were among the investment types most affected by the "flash crash" in May, but Bill McNabb, chief executive of The Vanguard Group, told investors that they are still a safe place to invest. (See Vanguard's top holdings list, below.)

“ETFs were a victim of the circumstance as opposed to a cause,” McNabb told CNBC at the Morningstar Conference. “We think the circuit breaker steps that are being discussed right now could be very helpful.”

McNabb also said the financial reform is "very important."

“It’s a complicated bill and there’s a lot of debate going on, but not to take some steps would be to ignore the lessons that history is trying to teach us,” he said. “First of all, there clearly needs to be a systemic risk council.”

As to the controversial question of derivatives trading, McNabb said he is in favor of seeing basic swap contracts centrally cleared.

“We think that would go a long way to reducing systemic risk because it brings price discovery and transparency to the market.”

Scorecard—What He Said:

  • McNabb's Previous Appearance on CNBC (Oct. 12, 2009)

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Vanguard’s Top Holdings:

ExxonMobil

Microsoft

Apple

General Electric*

P&G

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Disclosures:

No immediate information was available for McNabb or his firm.

*GE is the parent company of CNBC and CNBC.com.

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Disclaimer