Vanguard Shuffles Advisory Ranks

Vanguard has removed AllianceBernstein as a subadvisor on Vanguard Windsor VWNDX, Vanguard International Value VTRIX, and Vanguard Global Equity VHGEX. While Vanguard didn't cite a reason for the change, lackluster performance at these funds was probably a factor. Indeed, Vanguard dropped AllianceBernstein from Vanguard US Growth VWUSX in October 2010 after almost a decade of poor performance. In addition, AllianceBernstein has been plagued by layoffs, personnel departures, and asset outflows. It currently receives a D for its Morningstar stewardship grade. Fees are expected to go up at each fund in the wake of the moves. 

At Windsor, Vanguard will replace AllianceBernstein with Pzena Investment Management. That firm will now run 28% of Windsor's assets with Wellington Management overseeing 71%. (The rest is in cash.) Pzena has helped run Vanguard funds since 2005, including Vanguard U.S. Fundamental Value, which is domiciled in Ireland, and Vanguard Emerging Markets Select Stock. Pzena has built a so-so record running Neutral-rated John Hancock Classic Value PZFVX the past 15 years. But the firm doesn't have the culture problems that AllianceBernstein did. 

The Pzena connection runs through another one of the advisory changes. Vanguard appointed ARGA Investment Management to run 21% of International Value's $6.1 billion assets. ARGA founder Rama Krishna was previously a managing principal and portfolio manager at Pzena. He founded ARGA is 2010.

Vanguard didn't have to look far for an advisor to pick up the slack at Global Equity. Current subadvisor Baillie Gifford will now run 19% of the fund's assets, up for 6% previously. Vanguard also announced that Jeremy Hosking, part of Marathon Asset Management's team on Global Equity, will retire at the end of the year. Hosking's colleagues, Neil Ostrer and William Arah, remain in place. 

Vanguard announced that expense ratios for the investor shares of Windsor and International Value are expected to increase 2 basis points to 0.41%. The expense ratio for the Investor shares of Global Equity is expected to increase by 5 basis points to 0.59%. Even after the increases, the fees are still cheap relative to peers. 

Oakmark Reopens Fund
Harris Associates, the advisor for the Oakmark fund family, announced it has reopened Oakmark Equity & Income OAKBX to all investors after closing the fund to most financial intermediaries in mid-2010. Edward Studzinski recently stepped down as a manager of the Silver-rated fund and retired from the firm. But Clyde McGregor, who has run this fund since its 1995 inception, remains in place. The fund has a strong 15-year record that lands it at the top of the moderate-allocation peer group. But recent performance has been lackluster. That record is partly to blame for the fund seeing $1.4 billion exit the past 18 months. By opening the fund to new money, Oakmark is trying to better balance the fund's cash flows so McGregor isn't forced to sell positions at inopportune times.

Sentinel Managers Leaving for Competitor
Sentinel Investments announced that Chuck Schwatz, Betsy Pecor, Matt Spitznagle, and Matt McGeary, four of the five managers behind Sentinel Small Company SAGWX, Sentinel Mid Cap SNTNX, Sentinel Mid Cap II SYVAX, and Sentinel Sustainable Mid Cap Opportunities MYPVX, have resigned from the firm and are heading to Eagle Asset Management, the advisor to the Eagle fund lineup. Sentinel chief executive officer Christian Thwaites; Dan Manion, the director of equity research and comanager of Sentinel Common Stock SENCX; Hilary Roper, Manion's comanager on Common Stock; and Carole Hersam, a longtime analyst at the firm; will take over managment duties at each of the funds. Hersam has supported each of the funds as an analyst and was named a comanager on Sustainable Mid Cap Opportunities in March 2012. This isn't the first time a mass defection has hit Sentinel. In 2004 Scott Brayman, then the manager of Sentinel Small Company, left to start his own firm (which became Champlain). Brayman took several members of the staff with him at the time. Schwartz, who is leaving now, was the only member of Brayman's team who didn't leave during the last round of departures. 

Lord Abbett Announces Several Manager Changes
A recent fund manager change is having a trickle-down effect at Lord Abbett. In late July 2012, the company announced it was changing the mandate and the management team behind $1.1 billion Lord Abbett Capital Structure LAMAX, an aggressive allocation fund. It will now use a combination of quantitative screens and fundamental research to find attractively priced large- and mid-cap dividend-paying stocks. It will also be renamed Lord Abbett Calibrated Dividend Growth and will join two other funds in the firm's lineup that use a similar process and naming convention (although those two offerings aren't nearly as large as this one). Walter Prahl and Rick Ruvkun will comanage the new fund. Prahl is the head of Lord Abbett's quantitative research team while Ruvkun is the current director of domestic-equity research. The offering's previous management team remains at the firm overseeing other funds.