Why We Upgraded Vanguard Balanced Index Fund’s Process Pillar

Vanguard Balanced Index’s VBIAX management has taken advantage of the firm’s vast scale, research, and execution expertise to differentiate itself from its peers, prompting a Process Pillar upgrade to High from Above Average. The fund retains its Morningstar Medalist Rating of Gold.

This strategy is a straightforward combination of broad US stock and investment-grade bond market exposure. Vanguard’s implementation elevates it beyond just a basic mix of indexed portfolios. Michael Roach serves as the head of multi-asset portfolio management, which includes the investment management group that oversees this fund’s strategic asset allocation. He has refined trading and portfolio rebalancing, trading when allocations drift 200 basis points from their target weightings rather than rebalancing on a fixed schedule. The managers seek to restore exposures to within 175 basis points of their targets. This approach requires more frequent but smaller trades that may help reduce transaction costs, particularly during volatile markets.

The size and skill of Vanguard’s experienced portfolio management and underlying research teams help this strategy. Four managers oversee the construction of the underlying indexes that make up this portfolio. Roach and Aurélie Denis oversee the equity portfolio, while Joshua Barrickman and Tara Talone manage the fixed-income portfolio.

Key Morningstar Metrics for Vanguard Balanced Index Fund

Morningstar Medalist Rating: Gold

Process Pillar: High

People Pillar: Above Average

Parent Pillar: High

Resetting Expectations

The sudden departure of Janus Henderson Contrarian’s JCONX longtime lead manager Nick Schommer prompted People and Process downgrades to Average from Above Average. Despite the changes, the fund’s Medalist Rating remains Neutral.

Edward Su, who joined Janus as a consumer analyst in 2024, has replaced Schommer. Su has nearly two decades of investment experience but lacks relevant management experience and a public track record. The firm plans to name another manager to the fund, which creates further uncertainty. Su plans to follow Schommer’s process, but his predecessor’s experience and decision-making will be hard to replace.

Key Morningstar Metrics for Janus Henderson Contrarian Fund

Morningstar Medalist Rating: Bronze

Process Pillar: Average

People Pillar: Average

Parent Pillar: Average

Strong Manager

Increased conviction in Fidelity Advisor Small Cap Value’s FIKNX managers earned it a People rating upgrade to Above Average from Average and raised the fund’s Medalist Rating to Gold from Bronze.

Gabriela Kelleher rose from analyst to comanager in 2021 and took over at year-end 2023 after a former manager retired. Despite having 20-plus years of industry experience split between Goldman Sachs and Fidelity, this strategy is Kelleher’s first managerial charge. The previous Average rating reflected the need for additional evidence that she could successfully lead the strategy herself. She has proved a capable manager, as exemplified during the 2025 tariff-driven selloff, when she took advantage of dislocations to hunt for value and lean into cyclical names that went on to be top contributors.

Key Morningstar Metrics for Fidelity Small Cap Value Fund

Morningstar Medalist Rating: Gold

Process Pillar: Above Average

People Pillar: Above Average

Parent Pillar: High

Leadership Reshuffling

A key comanager’s unexpected departure from Brown Advisory Sustainable Growth BIAWX drops its People rating to Average from Above Average. This results in a Medalist Rating downgrade to Neutral from Bronze.

Longtime comanager Karina Funk will cease managing portfolios, including this strategy’s, on March 31, 2027. Funk has played an important role here, specifically in helping direct the strategy’s pursuit of companies with “sustainable business advantages”: features that are not only good for the planet or society but also for businesses themselves. Remaining on the team is David Powell, who has managed the strategy since its 2010 inception and is no stranger to environmental, social and governance thinking. New to managing public diversified portfolios is John Canning, who will replace Funk. It helps that Brown Advisory has gradually integrated its ESG analysts into the broader equity team in recent years, meaning the two groups work much more in tandem rather than on separate tracks.

Key Morningstar Metrics for Brown Advisory Sustainable Growth Fund

Morningstar Medalist Rating: Neutral

Process Pillar: Above Average

People Pillar: Average

Parent Pillar: Above Average

A Topnotch Crew

Heightened conviction in Causeway Emerging Markets’ CEMIX team of long-tenured quantitative managers earned a People rating upgrade to High from Above Average. This resulted in a Medalist Rating upgrade to Silver from Bronze.

The four long-tenured managers who lead this fund—Arjun Jayaraman, MacDuff Kuhnert, Joe Gubler, and Ryan Myers—average 25 years in the industry, 21 at Causeway, and nearly 14 as named portfolio managers here. They collaborate on decision-making, largely making go versus no-go decisions for modifications to the quant engine. They lean on two cohorts, senior and junior, of research analysts that continually expand and refine the team’s quant model. The four senior analysts often work on their own signals. The three junior analysts do much of the heavy lifting for more senior researchers in coding and testing new factors.

Key Morningstar Metrics for Causeway Emerging Markets Fund

Morningstar Medalist Rating: Silver

Process Pillar: Above Average

People Pillar: High

Parent Pillar: High