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Fund Times: Vanguard Tries to Tame a Tiger

Plus, Vanguard fund gets a new subadvisor, another global equity fund, and more.

Morningstar Analysts, 04/21/2008

Morningstar's fund analysts cover 2,000 mutual funds. Their full analyst reports, including Stewardship Grades, are available in Morningstar Principia Mutual Funds Advanced and Morningstar Advisor Workstation Office Edition.

World stock fund Vanguard Global Equity VHGEX is getting help. The family named U.K.-based asset manager Baillie Gifford as the fourth manager of this $6.8 billion fund. Veteran Charles Plowden will lead the effort. The team joins pre-existing subadvisors Acadian Asset Management, AllianceBernstein L.P., and Marathon Asset Management.

Vanguard also added Baillie Gifford's Scotland-based U.S. equities team, led by Mick Brewis, as the second subadvisor of Vanguard Growth Equity VGEQX. Previously, that fund's sole subadvisor was Turner Investment Partners.

These aren't Baillie Gifford's first Vanguard assignments. The firm's U.K. team, under James Anderson, has managed a portion of Vanguard International Growth VWIGX since February 2003. The changes probably will impact Vanguard Growth Equity more than Global Equity because Baillie Gifford's more valuation-conscious, lower-turnover approach is almost the polar opposite of Turner's momentum-fueled, high-turnover method of growth investing. Depending on how much of the fund Baillie Gifford runs (Vanguard won't divulge that information), the firm could tame the notoriously volatile Growth Equity.

Wasatch Plans Global Equity Fund
Wasatch has plans to launch a Global Opportunities fund. The fund will invest in emerging- and developed-markets stocks, micro-caps, and companies with market caps over $5 billion, according to regulatory filings. The filing notes that Wasatch may invest as much as 50% of the portfolio in emerging-market stocks under the right market conditions.

This announcement comes on the heels of the Wasatch decision to reopen several small-cap funds. It also follows proposals for new global funds from other families, including Dodge & Cox and Vanguard.

American Century Real Estate Manager Leaves Fund
Manager Scott Blasdell has left American Century Real Estate REACX. Blasdell was the leader of the fund's subadvisor team at J.P. Morgan Investment Management and will stay with that firm, but in a new (as yet undisclosed) role. Comanager Kay Herr will take over. Herr has been a J.P. Morgan employee since 1999 and a named comanager since 2007. This looks like a loss for shareholders. The fund's 16.4% gain during Blasdell's tenure from March 2002 to March 2008 beat the typical real estate's by 1 percentage point.

ING Replaces Emerging-Markets Fund's Subadvisor
Brandes Investment Partners is on its way out as subadvisor of ING Emerging Countries NECAX. At a recent ING Mutual Funds board meeting, the board voted to replace Brandes on an interim basis with ING's own ING Investment Management Advisors, beginning June 10. The board plans to approve IIMA as the fund's permanent manager at a meeting two weeks after that, pending shareholder approval.

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