Skip to Content

Vanguard to Offer New Active Funds for Advisory Clients

These high-conviction approaches will require an appetite for risk.

Securities In This Article
Vanguard Capital Opportunity Adm
Vanguard International Growth Inv
Vanguard Windsor Investor Shares
Vanguard Dividend Growth Inv
Vanguard International Core Stock Adm

Vanguard's efforts to enhance its active equity options for Personal Advisor Services clients took an important step with the Aug. 26 filing of registration statements for three high-conviction mutual funds set to debut in late 2021. Although new, each strategy builds on either an existing or prior Vanguard offering and uses proven investors from two of Vanguard's most trusted subadvisors.

Donald Kilbride of Wellington Management will run Vanguard Advice Select Dividend Growth. It is a more concentrated version of the strategy he has used to great effect on Vanguard Dividend Growth VDIGX since early 2006.

David Palmer, also of Wellington Management, will oversee the multi-cap Vanguard Advice Select Global Value. Palmer has led Wellington's 70% slice of Vanguard Windsor VWNDX since 2019, but he is more experienced than that start date suggests. He began covering energy stocks for Vanguard Windsor in 1998 and ran a portion of the multi-cap domestic offering Vanguard Capital Value from late 2009 to mid-2016, when he took over the whole and built a strong, if volatile, record until its July 2020 merger with Vanguard Windsor.

James Anderson and Lawrence Burns of Baillie Gifford will comanage Vanguard Advice Select International Growth. Both managers are part of the Baillie Gifford team running 70% of Vanguard International Growth VWIGX. They invest with a venture capital mindset, looking for the few companies that will achieve immense growth with the understanding that many ideas may fizzle out.

At 40 to 45 basis points per year, each fund is attractively priced compared with most active options, though more expensive than some Vanguard siblings. Vanguard Dividend Growth, for example, is 19 basis points cheaper than Vanguard Advice Select Dividend Growth's 45-basis-point annual charge. Its fees are likely to come down as assets scale, but the higher levy also likely reflects Vanguard Advice Select Dividend Growth's greater return potential. Kilbride has run an institutional version of this concentrated strategy since early 2008. Through July, its 13.7% annualized gross-of-fees gain beat Vanguard Dividend Growth by nearly 2 percentage points, albeit with greater volatility.

Vanguard's PAS business plans to pair these three new funds with two current ones, Vanguard Capital Opportunity VHCAX, subadvised by Primecap Management, and Vanguard International Core Stock VZICX, run by Kenneth Abrams and F. Halsey Morris of Wellington. Together, these five funds provide a high-reward, high-risk allocation either to add to a core of index funds or to be used on their own for those with the greatest appetite for risk. Either way, investors will benefit from getting advice about how best to use them along the way.

More in Stocks

About the Author

Alec Lucas

Director of Manager Research
More from Author

Alec Lucas is director of manager research, active funds research, for Morningstar Research Services LLC, a wholly owned subsidiary of Morningstar, Inc. He is a voting member of the Morningstar Medalist Ratings Committee for U.S. and international fixed-income strategies, covers fixed-income strategies from asset managers such as Baird and American Funds.

Lucas is also active in parent research. He is a voting member of the U.S. parent ratings committee and previously served as the lead analyst for Franklin Templeton, Capital Group, and Vanguard, among other firms.

Lucas was a strategist on Morningstar's equity strategies team prior to assuming his current role in June 2022. He covered equity strategies from asset managers such as Primecap and American Funds and received the 2019 Citywire Professional Buyer Rising Star Award.

Before joining Morningstar in 2013, Lucas worked as a minister as well as a professor for Loyola University Chicago, among other institutions. From 2010 to 2011, he was a Fulbright Scholar at the University of Heidelberg.

Lucas holds bachelor's degrees in philosophy and classics from the University of Missouri-Columbia, where he graduated summa cum laude and with departmental honors, and a Master of Divinity, summa cum laude, from Trinity International University. He also holds a doctorate in theology, with distinction, from Loyola University Chicago and has published several articles and one book within that field.

Sponsor Center