Vanguard International Value Fund Investor Shares VTRIX

Following a subadvisor change, Vanguard International Value’s People rating is downgraded to Average from Above Average. Vanguard had good reason to make a change to the subadvisor lineup. This portfolio had drifted out of value territory owing to now-terminated subadvisor Lazard’s sleeve. Vanguard replaced Lazard with Altrinsic, which should help this strategy migrate back toward value waters. Still, the current mix needs to prove its salt as a collective.

Vanguard’s June 2025 move to replace Lazard with Altrinsic was sensible. Lazard’s relative value approach meant that its managers were free to find value opportunities across the value-growth spectrum, which in recent years led them closer to growth. As international value stocks rallied past growth stocks in the past five years, investors in this fund were likely disappointed that they missed out on those value gains, especially given the fund’s name. Lagging performance in Lazard’s growth-leaning sleeve was largely to blame for the lackluster results in this fund. Altrinsic’s approach is closer to a core value strategy, and while it has some opportunistic elements to it, it shouldn’t result in the kind of holdings that Lazard’s approach did.

It remains to be seen how Altrinsic’s approach will interact with the other two other subadvisors. ARGA Investment Management and SpruceGrove Investment Management remain on the strategy, and all three will manage equal shares of the portfolio going forward. ARGA’s absolute value approach is the most volatile, but also one of the easier ones to nail down from a performance and portfolio expectation standpoint. SpruceGrove’s quality-focused approach to value means, like Altrinsic, it may drift into blend waters at times. There should not be too much holdings overlap among the subadvisors, but investors seeking pure international value exposure may need to look elsewhere. SpruceGrove and Altrinsic’s approaches will likely result in the portfolio settling on the value-blend border.

On the positive side, this remains one of the cheapest options to access active management in international markets.

Three equal-weighted subadvisors each apply a unique approach to this strategy, but it needs to prove to be effective when combined, limiting the Process rating to Average.

Altrinsic’s John Hock, John DeVita, and Rich McCormick look for companies that fit two main buckets. The first are catalyst-driven value opportunities that stand to benefit from internal or external change. The other are companies whose competitive advantages are underappreciated by the market. Rama Krishna and his team at ARGA, on the other hand, look for absolute-value stocks. They prefer to buy beaten up but not structurally disadvantaged stocks, and they take advantage of market dislocations to buy high-quality stocks that, in normal periods, are too expensive. SpruceGrove takes a relative approach, though it is not valuation-insensitive when looking for companies with strong balance sheets and consistent profitability.

Despite the removal of Lazard as a subadvisor, investors should still not expect a pure value portfolio here. Altrinsic and SpruceGrove can both look like blend portfolios at times, and investors should generally expect this portfolio to land near the value-blend border of the Morningstar style box. The fund is officially benchmarked to the MSCI ACWI ex USA Index, so while the fund’s name implies a value portfolio, the subadvisors are assessed—and, in part, compensated—on their ability to top a blend benchmark.

While a portfolio has yet to be disclosed since the subadvisor change was made in June 2025, investors should expect this fund to remain a borderline portfolio between value and blend. The three subadvisors have little overlap among their holdings, at least as of their latest disclosed portfolios for the underlying strategies in each sleeve. All three hold Alibaba, but that is the only stock held across the board. Overall, less than 20% of the portfolio will likely be held by two or more subadvisors.

Altrinsic’s addition will add financials exposure to the portfolio, as it holds significantly more in the sector, particularly insurance companies, than Lazard did. Additionally, investors should expect the technology allocation to come down a bit while the consumer defensive stake should rise. This means that the fund will lean more toward traditional value sector exposures than it has in the past, and the fund’s return profile should ultimately look more like a value fund than it has previously.

From a factor standpoint, Altrinsic leans more toward less volatile, higher-yielding stocks than Lazard did. Overall, Altrinsic’s factor biases should result in the aggregate portfolio moving closer to the MSCI ACWI ex-USA Value Index Morningstar Category benchmark on almost all key factors rather than making any existing tilt more pronounced. Investors should also expect Asian exposures to fall a bit, while North American and Latin American exposures will likely rise.

A recent subadvisor change merits a downgrade of the People Rating to Average from Above Average.

In June 2025, Vanguard replaced longtime subadvisor Lazard with Altrinsic. Now, three subadvisors—Altrinsic, ARGA, and SpruceGrove—will have equal-weighted sleeves of the portfolio. Each subadvisor has an experienced team overseeing its respective allocation, though a combined edge still needs to be proven.

Altrisinc’s sleeve is overseen by John Hock, John DeVita, and Rich McCormick. They have the support of nine analysts who focus on industry verticals, with the intention that analysts become experts in an industry’s “food chain.”

In March 2025, Shirley Woo stepped back from portfolio management duties for SpruceGrove, leaving its sleeve in the hands of lead manager Arjun Kumar and a team of roughly a dozen analysts that take a long-term, patient approach to value investing. Their analyst team is stable and made up of generalists, a decision they made so that analysts have a broad sector and geographic context when making stock recommendations.

Rama Krishna founded ARGA Investment Management in 2010 after spending 20 years in research and portfolio management roles at Pzena and Citigroup, among others. Krishna and comanager Steve Morrow, along with a roughly 40-member fundamental research team, collaborate to manage its sleeve. Krishna needs his team to produce a high quantity of deep research, so the large analyst team is crucial to his strategy’s success.

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 has struggled in recent years owing to its fairly pronounced style drift. Beginning at the end of 2020, former subadvisor Lazard (which controlled the plurality of fund assets) began to push into growthier stocks, and its sleeve was a borderline growth portfolio by the time Vanguard removed it from the strategy in June 2025. That was not a well-timed move by Lazard. While growth stocks in the US excelled since the end of 2020, the international story was much different. For instance, from the start of 2021 through June 2025, the MSCI ACWI ex-USA Value Index gained 50.0% while the MSCI ACWI ex-USA Growth Index gained just 11.8%. Investors in this fund (which is explicitly named a “value” fund) were likely disappointed when it posted just a 28.8% return in the same period, just barely more than half the index’s gain. While there is not a passive option for dedicated international value exposure, this portfolio also underperformed iShares MSCI ACWI ex-US ETF, which provides blend exposure to international markets, in that period.

ARGA has been a very strong performer for this fund. In that same five-year period, an identical separate account for ARGA’s sleeve rose nearly 75%. Meanwhile, a clone account to Lazard’s sleeve gained just 15.8%, while a similar SpruceGrove separate account rose 21.4%. A portfolio identical to the one Altrinsic is adding to this fund gained 48.7% in the same five-year window.

Vanguard International Value Inv's Prospectus Adjusted Expense Ratio is 0.36% per year. It places it in the cheapest quintile of the Morningstar US Fund Foreign Large Value Category, where the median fee is 0.87% per year. This cost positioning translates into a Medalist Rating Price Score of 2.18, 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.