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Vanguard makes advisory changes for two active equity funds

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Vanguard has made new investment advisory arrangements for the USD11.7 billion Vanguard Morgan Growth Fund and the USD11 billion Vanguard Explorer Fund.

Vanguard Explorer Fund, a small-cap growth fund, has employed a multi-manager structure since 1990. The fund will now use seven advisors, with Century Capital Management, no longer serving as an advisor to the fund. Assets formerly managed by Century (approximately 7 per cent) have been apportioned to Arrowpoint Partners, Vanguard Quantitative Equity Group, and Stephens Investment Management Group, LLC, which currently serve as advisors to the fund.  
 
Allocation of assets among advisors is expected to be: Wellington Management Company, 29 per cent; Kalmar Investment Advisers, 16 per cent; Granahan Investment Management, Inc., 15 per cent; Arrowpoint, 11 per cent; Vanguard, 11 per cent; Stephens, 11 per cent; and Chartwell Investment Partners, 7 per cent.
 
Vanguard Morgan Growth Fund will be now be managed by four advisory teams, with Kalmar Investment Advisers no longer serving as advisor to the fund. Current management teams Jennison Associates, Frontier Capital Management Co, and Vanguard Quantitative Equity Group assumed responsibility for the assets previously managed by Kalmar (approximately 9 per cent).
 
The large- and mid-cap growth fund has been multi-managed since 1990, and following the transition, the allocation is expected to be as follows: Wellington, 48 per cent; Jennison, 22 per cent; Frontier, 15 per cent; and Vanguard, 15 per cent.
 
The multi-manager approach was first adopted by Vanguard in 1987, and 18 of Vanguard’s actively managed US-domiciled equity funds currently employ this structure. Vanguard believes the combination of high-caliber investment management teams with differentiated but complementary strategies can reduce portfolio volatility, provide potential for long-term outperformance, and mitigate manager risk.
 

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