What Important Manager Changes at Vanguard Mean for Investors

Susan Dziubinski: How about manager departures or subadvisor changes at Vanguard last year? Were there any that you would say were particularly notable, and if yes, were there any changes to any of the Morningstar Medalist Ratings as a result of a manager change?

Daniel Sotiroff: So, there were a few changes. The first one, and I think you actually brought this up, was Jean Hynes on Vanguard Health Care VGHCX. This was somewhat of an expected departure. If you go back to October 2020, Wellington actually announced that she was going to become the CEO of the Wellington Group, and they didn’t really forecast who was going to be her replacement on that fund, I guess is the way to say it. But we found that out in 2023, they added Rebecca Sykes as a comanager on that fund. So they actually co-ran the fund for about a year and a half, and now Jean Hynes is officially stepping off, and she’s going to take on sole responsibility as a CEO.

The good thing is this is kind of a model for how you want to do manager transitions. You name a successor, you bring the successor in for a little bit, awhile, there’s a little bit of a transition period, and then … Jean Hynes is not going anywhere. She’s still going to be there if you need her, but suffice it to say, very well-organized transition, so we’re glad to see that that got over with.

Similar to that, Donald Kilbride on Vanguard Advice Select Dividend Growth Fund VADGX is also going to be leaving that fund, and that’s going to be handed off to Peter Fisher, who’s been working with him since 2012, and I think we brought this up in prior conversations. He’s been the longtime manager of Vanguard Dividend Growth VDIGX. We loved that fund for many, many years.

Likewise, Peter Fisher took over that fund last year as he stepped down. So this has been part of a bigger transition plan that Vanguard and Wellington have been coordinating behind the scenes, and again, another model of how you should be transitioning from one manager to another. Largely, the process isn’t really changing. We still like that. That’s a High Process rated fund. We did downgrade the People Pillar on that to Above Average from High just because this is a new manager. You have some other people that are changing on the team. So we want to make sure the team is jelling and everything’s working before we reassign that High People Pillar again in the future.

• Vanguard Health Care Inv VGHCX
• Vanguard Advice Select Dividend Growth Fund VADGX
• Vanguard Star Fund Investor Shares VGSTX

The one other thing I would point out—this was a recent announcement, came out at the end of last year—was Star Fund. So this is one of those multi-asset funds. It’s a combination of stocks and bonds. It’s basically a 60/40 portfolio, but it’s built up of other Vanguard actively managed funds. So the big change there is they’re going to be changing the underlying funds. It’s still going to be a 60/40 portfolio going forward. The split between foreign and domestic is staying the same. What you should expect—a little bit more exposure to large caps. They’re getting rid of some of the smid exposure. A little bit more exposure to value stocks. You think about just the dynamics of what’s been going on in the market. They’re going to be underweighting some of the biggest stuff out there that’s looking a little bit more expensive right now. And then a little less duration, a little more credit risk in the bond portfolio. They’re actually making a big change to the bond portfolio there, but we have more details on that if you look up the Star Fund. Suffice it to say that those look like reasonable changes. So no huge surprise there. It’s still going to be a lot of what investors expect: 60/40 portfolio at the end of the day.