Vanguard Global Equity Fund Investor Shares VHGEX

Vanguard Global Equity’s trio of subadvisors is well-resourced with strong investment processes, making the strategy a solid choice for core global equity exposure.

This fund offers exposure to strong money managers at a cheap price. Baillie Gifford, which has managed a slice of assets since 2008, anchors the portfolio with a 50% target allocation. The Scottish firm’s sleeve is managed by veterans Spencer Adair and Malcolm MacColl; Helen Xiong became a comanager in 2021. The group has produced good results on a similarly run stand-alone strategy and benefits from a pool of ideas stemming from the firm’s various regionally focused strategies and a team of scouts tasked with flagging top picks. The managers invest in a mix of companies, including cyclical, steady, and fast growers, but have a particular focus on capturing stocks in the last bucket that have the greatest upside potential.

Pzena oversees about 25% of assets and joined this fund as a subadvisor in 2022 after Vanguard parted ways with Marathon Asset Management. It boasts a deep team led by comanagers Caroline Cai, John Goetz, and Benjamin Silver. All three are veterans of the firm; Goetz has managed the sleeve’s underlying strategy since 2004, Cai since 2009, and Silver since late 2016. Pzena has more than 20 other investment personnel who maintain global equity coverage. This sleeve focuses on identifying underperforming companies with a good foundation and a pathway to recovery. The process is systematic and repeatable.

Wellington joined along with Pzena in 2022 and oversees the remaining 25% of assets. Managers Michael Masdea and Brian Barbetta don’t have the same lengthy track records as their counterparts, though they have strong support from a roster of more than 50 global industry analysts and the backing of a good firm. The managers run a concentrated sleeve focused on high-growth stocks within a patient framework.

The combination of the three firms leads to a portfolio that hovers around the border between the blend and growth sections of the Morningstar Style Box, given that Pzena’s value sleeve roughly offsets Wellington’s growth-oriented sleeve, with Baillie Gifford’s growth style as the tiebreaker.

The fund’s limited track record under its current incarnation is tepid, with a good showing in 2023 but a weaker one in 2023 and 2024. A longer time horizon should reveal an advantage, given the quality of the components.

The investment processes of the underlying managers are of good quality in aggregate, earning an Above Average Process Pillar rating.

Baillie Gifford targets firms capable of growing earnings by at least 10% per year but places extra emphasis on owning those with the most upside. Despite its aggressive leanings, the managers diversify the portfolio by incorporating companies with different growth trajectories. Ideas can come from the managers themselves, but are generally sourced from other Baillie Gifford teams, which invest in stocks across global regions and market caps. Execution has been strong overall since the firm's 2008 debut on this fund, though weakness in 2022 highlighted the need for more nuanced risk controls.

Pzena's sleeve is focused on deep-value stocks capable of a rebound. With the help of a proprietary model, the team sorts through the 2,000 largest global companies to find those trading in the bottom quintile of a price/normalized earnings ranking. Within that bucket, the team prefers companies that can earn their cost of capital and have low to moderate leverage. The team earns its keep based on its assessment of a company's true earnings power and has done a good job following a difficult stretch during the 2007-08 global financial crisis.

Wellington's managers hunt for stocks capable of transformative growth that are displaying high innovation. Such stocks trade with lofty revenue growth expectations and valuations. The ones that can outperform those expectations can deliver huge gains, but the ones that fizzle out can plummet fast. Execution has been mixed over a limited sample beginning in early 2017, though the managers hung tight with their highest-conviction holdings during a rough 2022, which paid off in 2023.

This portfolio has tended to fall in the growth section of the Morningstar Style Box. New subadvisors Pzena and Wellington have counteracting styles that should net out, while Baillie Gifford's growth-oriented half should be the tiebreaker.

Former subadvisor Marathon Asset Management maintained a highly diversified portfolio of separately managed sleeves that resulted in a large number of holdings. By contrast, Pzena and Wellington each run portfolios of around 50 stocks, so the overall fund has become more concentrated. It once held around 600 unique stocks but is now closer to 200.

A particular sector- or regional-allocation profile for this fund is hard to pin down. Each subadvisor operates in a bottom-up fashion and could easily pivot from one year to the next. That being said, each should keep the portfolio from being too concentrated in one particular area. For example, Pzena has a 25% limit on emerging-markets exposure and a 25% limit on any one sector (save for financials, which can take up 45% of its sleeve).

Large caps remain the focus, though there is meaningful exposure down the market-cap ladder. As of June 2024, the portfolio held roughly 30% of assets in mid- or small caps.

The strong teams at Baillie Gifford and Pzena anchor the fund's Above Average People Pillar rating.

Three-fourths of this fund's assets are overseen by Baillie Gifford and Pzena, which benefit from highly experienced managers and the backing of strong firms with well-defined investment cultures.

Spencer Adair and Malcolm MacColl of Baillie Gifford joined in 2008, but they have had success running the sibling strategy Baillie Gifford Global Alpha since 2005. Helen Xiong joined the roster in September 2021 to replace the retiring Charles Plowden and is an appropriate fit. She previously supported the strategy as an analyst and came with management experience from other firm strategies. Baillie Gifford's broader team also has ample regional- and sector-investment expertise.

Experienced managers John Goetz, Caroline Cai, and Benjamin Silver oversee Pzena's sleeve. The three are all veterans of the firm. Goetz has managed the sleeve’s underlying strategy since 2004, Cai since 2009, and Silver since late 2016. The firm has more than 20 other investment personnel who maintain global equity coverage.

Wellington's management duo is less experienced and proven than the others. Michael Masdea is the lead manager, and Brian Barbetta is a comanager. Both have considerable research experience in the technology sector as analysts at Wellington, but lack other portfolio-management experience. The two have been the only managers since the strategy's 2017 inception. They have strong support from a roster of more than 50 global industry analysts, which is a plus.

Vanguard maintains its High Parent Pillar rating as it continues to grow under new leadership.

CEO Salim Ramji has had a busy first year captaining Vanguard’s crew, and the ship remains pointed in the right direction. The firm made its largest round of fee cuts in early 2025, which came at an estimated cost of USD 350 million. It established a separate division dedicated to its advice and wealth management efforts, a sign that it wants to seriously compete within those lines of business. Asset growth has continued to be a huge success. Only BlackRock’s inflows rival the money Vanguard is taking in. Likewise, the number of clients it serves has more than doubled since 2015.

Despite that success, an ever-growing number of clients has presented a challenge: Vanguard can’t grow its services fast enough to keep up with demand. In some instances, it has had to curb certain services and capabilities or raise fees on others to cope, causing some loyal clients to criticize what they perceive as deteriorating services.

Vanguard has ambitions to bring its disruptive legacy to the bond market. It created roughly a dozen low-cost bond exchange-traded funds for US investors and several others abroad over the 12 months through June 2025. All have low fees in their respective categories, and the actively managed strategies align with Vanguard’s philosophy. They are relatively easy to understand and are conservatively managed.

Vanguard has another opportunity to prove that clients are still its priority. On the surface, its endeavor into the high-fee deal-making world of private assets alongside Wellington and Blackstone looks like a cultural mismatch. So far, the collaboration hasn’t produced anything that’s concerning.

This fund's historical performance is less relevant since subadvisor Marathon Asset Management was removed in August 2022, though it is reflective of Baillie Gifford, which still oversees half of the fund’s assets.

Baillie Gifford's sleeve had posted consistently strong results since its 2008 addition, but it hit its roughest patch in 2021 and 2022. The sleeve's growth skew and a handful of poor stock picks hurt performance as markets declined amid high inflation and rising interest rates. It bounced back in absolute terms in 2023, but an underweighting in technology stocks and subpar stock selection in other areas have led to weak results since.

Relative to the growth-oriented Baillie Gifford, Pzena held up significantly better in 2022's drawdown. However, even in the growth-happy market that emerged in 2023, Pzena's sleeve performed quite well. Growth focused 2024 was underwhelming year for the strategy as it underperformed MSCI ACWI Value Index by a notable margin.

Wellington's aggressive growth sleeve suffered during 2022’s bear market but bounced back in 2023. The managers deserve credit for holding on to some of their worst performers that subsequently recovered. However, the first half of 2024 hasn’t gone as well, mostly owing to weakness in select software stocks.

This fund’s overall tilt suggests it should perform better in a growth-led market, though given that it is more differentiated from the benchmark than in the past, stock selection will also have much sway.

Vanguard Global Equity Inv's Prospectus Adjusted Expense Ratio is 0.38% per year. It places it in the cheapest quintile of the Morningstar US Fund Global Large-Stock Blend Category, where the median fee is 0.88% per year. This cost positioning translates into a Medalist Rating Price Score of 1.94, which reflects its relative price positioning within the category. The Price Score ranges from -2.50 (most expensive) to +2.50 (cheapest), with higher scores indicating better cost competitiveness.