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A Fundamental Approach With Vanguard Energy

The Silver-rated specialty fund features capable management, a deep analyst team, and low fees.


Nick Watson: Vanguard Energy takes a disciplined approach to the energy market's ups and downs. Its capable management, deep analyst team, and low fees earn it a Morningstar Analyst Rating of Silver.

While Vanguard's Quantitative Equity Group manages a small portion of this fund, the majority of assets are run by Greg LeBlanc's team at Wellington Management. Unlike some competitors, they don't make top-down macro bets on the energy market. Rather, LeBlanc and his team of six veteran analysts take a fundamental approach--identifying companies with strong management, quality balance sheets, and promising project pipelines. They do keep large-scale energy market trends in mind, but the success of their approach doesn't hinge on correctly forecasting oil prices, for instance.

Although energy investing can be volatile, this fund has an impressive long-term record and has tended to preserve capital better than its peers, and recent mixed performance shouldn't weigh too heavily as a concern. It helps that fees are lower than 95% of its no-load specialty fund peers, which rounds out the case for the fund's Silver rating.

Nick Watson does not own (actual or beneficial) shares in any of the securities mentioned above. Find out about Morningstar’s editorial policies.