Vanguard Mid-Cap Growth Fund Investor Shares VMGRX

Despite a big shakeup, Vanguard Mid Cap Growth retains long-term merit and earns an Above Average People rating; the Process rating is Average.

The fund saw several subadvisor changes amid persistent weak performance that trailed the Russell Midcap Growth Index and most mid-growth Morningstar Category peers in the trailing decade through August 2025. During that time, the fund’s subadvisor lineup shrank from three subadvisors in 2018, to two in 2022, and now one: Tremblant Capital, which replaced Frontier Capital Management and Wellington Management in September 2025.

Tremblant, a firm that historically focused on hedge funds, has been broadening its investor base with the launch of Tremblant Global ETF in May 2024, and the Vanguard subadvisory mandate will roughly quadruple Tremblant’s assets under management to USD 4 billion. Leading the charge is Brett Barakett, who founded the firm in 2001 and heads the five-person senior investment team alongside Michael Cling. The team stands out as a cohesive group of industry veterans with skin in the game. Excluding Barakett (who has nearly four decades of industry experience), they average 20 years at the firm and 26 in the industry. They’re also all firm partners.

Tremblant will put its own mark on the fund’s mid-growth mandate. Their process is built on four tenets: assessment of the business model, financial strength, consequential change (such as new management or product offerings), and data science. They invest with conviction, so investors should expect the portfolio to concentrate from about 110 holdings under its former subadvisors to about 65 under Tremblant. Sector bets will likely be more pronounced as Tremblant has more leeway to shape the portfolio as it sees fit.

Big sector bets drove stellar results on Tremblant’s Global ETF during its brief 16-month existence through August 2025. However, there's uncertainty around the team’s ability to invest in sectors they’ve so far avoided in the exchange-traded fund, like healthcare and industrials, which together accounted for about 30% of the Russell Midcap Growth Index.

Overall, the team members' experience and alignment with investors are a plus, but they have more to prove in successfully navigating a broadly diversified portfolio over the long term.

The fund will keep its mid-growth mandate under new subadvisor Tremblant Capital, which has more to prove, warranting an Average Process rating.

Tremblant’s process is built on four tenets: assessment of the business model, financial strength, consequential change (such as new management or product offerings), and data science, which uses proprietary alternative sources to support the team's fundamental views. The team looks for stocks that can at least double within a three- to five-year time period.

The approach will aim for a centroid in the mid-growth portion of the Morningstar Style Box, but it will invest broadly across the market-cap spectrum. That flexibility allows the fund to hold on to winners as they appreciate; it also differentiates it from more constrained mid-growth rivals and the fund’s previous subadvisors, who used narrower approaches.

The team applies a similar process on the Tremblant Global ETF, which despite having a global mandate has mainly invested in US stocks. The ETF has posted impressive results since its May 2024 launch (through August 2025), but uncertainty remains around the team’s ability to invest in sectors it has historically avoided in the ETF, like healthcare and industrials. Together, these sectors accounted for about 30% of the Russell Midcap Growth Index as of August 2025, so they’ll likely play bigger role in this fund as it’s more benchmark-aware than the ETF.

Investors should expect some portfolio changes once Tremblant Capital takes over as the fund’s sole subadvisor in mid-November 2025.

Tremblant invests with conviction, so the portfolio will become more concentrated. Under former subadvisors Frontier Capital Management and Wellington Management, the portfolio typically held about 110 stocks. Under Tremblant, it will own around 65.

Revenue exposure is likely to shift, too. Tremblant has a global orientation and often owns businesses that generate significant amounts of revenue outside the US, despite being listed on US exchanges. According to Morningstar’s revenue exposure tool, Tremblant’s Global ETF—which uses a similar approach and which had all but three holdings trading on US exchanges—earned 42% of revenue outside the US as of June 2025. In comparison, this fund earned 33% outside the US under its former subadvisors.

Sector weightings under Frontier and Wellington often stuck within a few percentage points of the Russell Midcap Growth Index. While Tremblant’s mandate here is far from benchmark-agnostic, they will have more leeway to make bigger sector bets when they’re informed by bottom-up, fundamental research. Thus, sector bets will likely drive performance here more than they did previously. This, alongside a more concentrated portfolio, is likely to result in higher active share going forward; it was 65% as of June 2025.

A subadvisor change ushers in a cohesive team of industry veterans with skin in the game; the fund earns an Above Average People rating.

Vanguard announced a significant shakeup for this fund on Sept. 10, 2025: Tremblant Capital will become the sole subadvisor, replacing Frontier Capital Management and Wellington Management, which had run 60% and 40% of the strategy, respectively. The recent move adds to a long history of subadvisor changes and shifting allocations during the past decade as the fund struggled with weak performance.

Tremblant, a firm historically focused on hedge funds, has been broadening its investor base with the launch of Tremblant Global ETF in May 2024; the Vanguard subadvisory mandate will roughly quadruple Tremblant’s assets under management to USD 4 billion.

Leading that charge is Brett Barakett, an industry veteran with nearly four decades of experience who founded the firm in 2001. He serves as its co-CIO alongside Michael Cling. Both oversee risk management for this fund, while Cling and two sector heads pick stocks in their respective sectors. Nick Onofrey, head of data sciences, rounds out the five-person senior investment team, which is tenured and cohesive. Excluding Barakett, they average 20 years at the firm and 26 in the industry. Furthermore, they’re all firm partners, which helps align their interests with investors’. Three analysts provide decent support.

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.

A shifting subadvisor lineup makes the fund’s long-term record less relevant.

The fund has a history of subadvisor changes amid weak performance. In the trailing 10 years through August 2025, its 9.6% annualized gain lagged the mid-growth Morningstar Category average and the Russell Midcap Growth Index by 0.9 and 3.4 percentage points, respectively. In 2016, RS Investments replaced Chartwell Investment Partners, which had run half the portfolio alongside William Blair until 2018, when Frontier Capital Management and Wellington Management took over William Blair’s stake. In December 2022, Vanguard removed RS after it lagged in every calendar year it was on the fund, leaving Frontier and Wellington to manage 60% and 40% of the portfolio, respectively. But the underperformance continued. In September 2025, Tremblant Capital became the fund’s sole subadvisor.

Tremblant has a long history of running hedge funds and other private investment vehicles. Its only publicly available track record is on Tremblant Global ETF, which launched in May 2024 and uses a similar approach to the one it will implement here. (Despite the global name, Tremblant Global is predominantly invested in US stocks.) From inception through August 2025, its 39.3% cumulative gain beat the MSCI World Index prospectus benchmark by 10.5 percentage points, thanks in large part to big sector bets in communication services and healthcare. While impressive, this period was short and raises questions about the team’s ability to shift the portfolio when other sectors are in or out of favor.

Vanguard Mid Cap Growth Inv's Prospectus Adjusted Expense Ratio is 0.33% per year. It places it in the cheapest quintile of the Morningstar US Fund Mid-Cap Growth Category, where the median fee is 0.96% per year. This cost positioning translates into a Medalist Rating Price Score of 2.31, 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.