Vanguard changes management of three funds with combined assets of $24 billion

Vanguard is shuffling management of three funds with combined assets of $24 billion.

The Valley Forge, Pa., mutual fund behemoth said it’s booting M&G Investment Management Limited from the $21 billion Vanguard International Growth Fund (VWIGX) and the $2 billion Vanguard Variable Insurance Fund (VVIF). London-based M&G had managed 11.5% of International Growth and 14.3% of Variable Insurance.

Remaining manager Baillie Gifford Overseas Ltd., based in Edinburgh, Scotland, will now handle 60% of both funds. And the other remaining manager, Schroder Investment Management North America, will oversee 40%. Its parent company is based in London.

In a generally miserable period for international stocks, Vanguard International Growth, Vanguard’s oldest foreign fund, ranks in the 51st percentile among foreign growth funds the past five years, according to Morningstar, and the 44th percentile the past 12 months. Vanguard Variable Insurance Fund is a variable-annuity clone.
That’s not bad, said Dan Wiener, editor of The Independent Adviser for Vanguard Investors. “International Growth has been outperforming Total International Stock Index (VGTSX) consistently for much of the last decade,” he said.

The $1 billion Vanguard Capital Value fund (VCVLX) will go from two managers to one. Peter Higgins of Wellington Management will no longer be co-manager, leaving David Palmer, also of Wellington, to be the sole manager.

The fund landed in the 77th percentile of midcap blend funds the past 10 years and the 92nd percentile the past 12 months, Morningstar says. “The fund has been a chronic underperformer with flashes of brilliance — something one would expect from a deep-value, go-anywhere fund,” said Mr. Wiener.

Vanguard gave no reason for the change, except to say, “After careful consideration, the funds’ board of trustees determined that the adviser teams are now configured to a combination of investment approach, expertise and resources to better serve shareholders going forward.”

Vanguard manages about $3.6 trillion in global assets and claims more than 20 million investors worldwide.