Plus, RiverSource and Neuberger Berman merge funds.
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Vanguard Growth Equity
Vanguard Growth Equity used to be a large-growth Analyst Pick, too. But we dropped it in 2008 after Vanguard hired Scotland-based Baillie Gifford to manage what eventually became half of the portfolio. Baillie Gifford has a solid record using a bottom-up, buy-and-hold strategy to pick core U.S. growth stocks, but adding them to Growth Equity's mix tamed what had been an aggressive, momentum-driven pure growth vehicle. Turner employed a feast or famine style that looked great in periods when growth stocks rallied and terrible when they flopped. It has spent much of the past decade flopping during an overall trying period for growth investors. From the time the fund joined the Vanguard family--ironically near the March 2000 peak of the technology and growth stock bubble--through the end of 2008 the fund lost an annualized 10.8%, far more than category average and the Russell 1000 Growth Index.
The fund under Turner was disciplined and capable of making up lost ground in a hurry, for example posting a nearly 39% gain in 2003, a year after losing 31% in 2002. But apparently Vanguard concluded that the fund's ups and downs were too much for shareholders to handle. Indeed, the fund's investor returns, which factor shareholder cash flows into a fund's results, were among the worst in Vanguard's stable.
Though Jennison is no shrinking violet, its buy-and-hold, fundamentally focused approach and the presence of Baillie Gifford are sure to take a lot of the edge off this fund. It's too early to say if the combination will deliver better results than Turner, but it is clear the fund will be cheaper. Its expense ratio will drop from 0.72% to 0.60%.
Marriages of Convenience
RiverSource Disciplined Equity
Neuberger Berman Large Cap Disciplined Growth
After being off-limits to new investors for seven years, Neuberger Berman Genesis