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Vanguard makes advisory appointments to three value funds

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Vanguard has made changes to the multi-manager structures of three value funds: the USD47.5 billion Vanguard Windsor II Fund, the USD8.0 billion Vanguard Selected Value Fund, and the USD951.5 million Diversified Value Portfolio of Vanguard Variable Insurance Fund. 

Two new advisory firms will join Vanguard’s distinguished lineup of 24 external investment advisors, bringing a wealth of experience and talent that Vanguard believes will result in stronger long-term performance for the funds and better outcomes for clients moving forward. The changes are detailed below.

Aristotle Capital Management, LLC (Aristotle Capital) has been added to Windsor II Fund, joining existing advisors Lazard Asset Management, LLC, Hotchkis and Wiley Capital Management, LLC, and Sanders Capital, LLC.

Aristotle Capital is a 100 per cent employee-owned investment manager with USD19.6 billion in assets under management. The firm employs a value-oriented investment style founded on fundamental research and investing in high-quality businesses. The 17-member Global Investment Team conducts bottom-up fundamental company research. Howard Gleicher, CFA, and Greg Padilla, CFA, will co-manage Aristotle Capital’s portion of Windsor II Fund. Gleicher serves as the chief executive officer and chief investment officer. He has 35 years of industry experience and earned an MBA from Harvard University. Padilla serves as a portfolio manager and has 14 years of industry experience. He earned an MBA from the University of Southern California.

Cooke & Bieler, LP (Cooke & Bieler) has been added to Selected Value Fund, joining existing advisors Donald Smith & Co, Inc, and Pzena Investment Management, LLC. Cooke & Bieler is a Philadelphia-based investment manager founded in 1949, noted for its unique structure and approach. The employee-owned partnership manages only US domestic value equites totalling USD6.2 billion, mainly on behalf of institutional clients. The firm’s investment philosophy is to buy high-quality businesses at attractive prices while its analyst-driven process eliminates information loss and creates clear accountability. Mehul Trivedi, CFA, and William Weber, CFA, who are partners and career analysts, will manage Cooke & Bieler’s portion of the Selected Value Fund on behalf of the eight-person team. Trivedi earned an MBA from the Wharton School of the University of Pennsylvania and has been a portfolio manager at Cooke & Bieler since 1998. Weber earned an MBA from the University of Chicago and has been a portfolio manager at Cooke & Bieler since 2010.

Lazard Asset Management, LLC, and Hotchkis and Wiley Capital Management, LLC, two of the current managers of Windsor II Fund, have been added to Vanguard Diversified Value Portfolio.

These restructurings also result in Barrow, Hanley, Mewhinney & Strauss (BHMS) no longer serving as an advisor to the three funds. Vanguard Quantitative Equity Group, which has managed less than 1 per cent of Windsor II Fund’s assets for the last 10 years, has also been removed from the advisory team.

“We are pleased to add Aristotle Capital and Cooke & Bieler to the exceptional array of investment firms managing Vanguard funds, and are confident that their management approaches will benefit clients over the long-term,” said Dan Newhall, head of global oversight and manager search for Vanguard Portfolio Review Department. “We are grateful for BHMS’ contributions to the long-standing success of these funds and their commitment to our investors.”

Newhall noted that to protect the funds’ shareholders and minimise trading impact, Vanguard has repositioned the portfolios and transferred assets to the new advisory firms.

Vanguard Windsor II Fund’s expense ratios are expected to change to 0.26 per cent from 0.25 per cent for Admiral™ Shares and to 0.34 per cent from 0.33 per cent for Investor Shares. Vanguard Selected Value Fund’s expense ratio is expected to change to 0.33 per cent from 0.36 per cent. The expense ratio for Vanguard Diversified Value Portfolio is expected to change to 0.28 per cent from 0.25 per cent.

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