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Active bundle of funds exclusive to Vanguard advice clients

Discover how you can tailor your portfolio to pursue outperformance with our bundle of active equity funds from some of the world's top managers.
9 minute read
  •  
September 15, 2023
Advice
Mutual funds
Active funds

Vanguard is well-known for index funds. But did you know our active equity funds have historically delivered significant excess returns versus their benchmarks?* And when suitable and combined in a diversified, balanced portfolio, active and index funds can complement each other.

Discover how you can tailor your portfolio to pursue outperformance with our carefully constructed bundle of active equity funds from some of the world's top managers. This "Active Select" bundle—and some of its underlying funds—are only available to Vanguard advice clients.

Vanguard is an industry leader in active management

Today, we're the third-largest active fund provider in the world.** Active funds have been a significant part of our history going back to our start in 1975. In fact, our first 11 funds were actively managed.

We believe equally in the merits of Vanguard's active and index funds. It's not about one versus the other; it's about giving investors the best chance for success. Since your success with active funds requires patience and an appropriate risk tolerance, it's critical to ensure active funds are right for your goals and risk appetite.

Our active and index funds share the same Vanguard DNA: They're low-cost compared to the industry and built to deliver long-term results. That's what sets them apart, and we have the results to prove it: Over the past 10 years, 92% of our actively managed funds performed better than their peer-group averages.*** And, since 1999, Vanguard active equity funds have delivered significant excess returns against their index benchmarks.*

Note: For the 10-year period ended June 30, 2023, 6 of 6 Vanguard money market funds, 42 of 44 Vanguard bond funds, 6 of 6 Vanguard balanced funds, and 32 of 37 Vanguard stock funds―for a total of 86 of 93 Vanguard funds―outperformed their Lipper peer-group averages. Results will vary for other time periods. Only actively managed funds with a minimum 10-year history were included in the comparison. Source: Lipper, a Thomson Reuters Company. The competitive performance data shown represent past performance, which is not a guarantee of future results. View fund performance

Our secret sauce for investor success

Every Vanguard active fund is built on these 3 pillars that reflect our values and have led to strong long-term investment outcomes:

  • Talent: Our investors gain access to world-class managers. We have a diverse team of experts dedicated to searching for and evaluating fund managers, and we build deep relationships with those chosen partners.
  • Discipline: Success in active is about patience, not chasing performance. We give our managers the runway they need to make sound decisions, stick to their strategies, and focus on long-term results.
  • Alignment: At Vanguard, you're more than an investor—you're an owner.† Our primary focus is to create value for our investors. And our client-first culture helps us keep costs low and interests aligned. 

An active option designed exclusively for Vanguard advice clients

Active Select, our bundle of actively managed equity funds, is designed to pursue outperformance. Since it's an exclusive offer for Vanguard advice clients, our advisory services will help assess if it's right for you. Here's what else you can expect from the bundle:
 

Personalization: These funds are built to offer more portfolio personalization and the chance for better long-term outcomes. We've developed a proprietary tool to capture your active risk tolerance and determine an appropriate mix of active and index for you. Then we look at your existing investments to make sure you can benefit from these active funds.

Simplification: It can be hard to do active on your own, so let us do it for you. Portfolio construction is complex. Manager and fund selection are too. Active Select is the result of an extensive process where we considered over 45 strategies. Ultimately, we chose 5 funds that work well together and pursue returns above their benchmarks.

Exclusivity: Active Select is a carefully constructed bundle of 5 funds, 3 of which are only available to our advice clients. The bundle was designed specifically for advised clients to help them pursue outperformance while considering their active risk tolerance. 

Active Select tilt composition

The 5 funds we've chosen for the bundle

Manager: PRIMECAP Management Company

Strategy: Targets U.S. growth-oriented stocks that are overlooked by the market, available at attractive prices, and expected to outperform. With a culture of autonomy, PRIMECAP empowers its members to think creatively and independently, which allows them to make contrarian, long-term investments. 

View the Vanguard Capital Opportunity Fund

Manager: Baillie Gifford Overseas Ltd.

Strategy: Invests primarily in international stocks, diversifying its assets in countries across developed and emerging markets and focusing on companies considered to have above-average growth potential. This fund targets a relatively small number of businesses that are creating and benefiting from long-term structural changes in the economy and society.

View the Vanguard Advice Select International Growth Fund

Manager: Wellington Management Company LLP

Strategy: Targets high-quality and financially sound larger-cap companies in stable industries that are less vulnerable to business disruptions and have prospects for long-term total returns and dividend growth. 

View the Vanguard Advice Select Dividend Growth Fund

Manager: Wellington Management Company LLP

Strategy: Identifies large-, mid-, and small-cap companies across the world that are undervalued due to behavioral biases in the market and have the potential for positive sentiment shifts. Looks to diversify its assets in countries across developed and emerging markets.

View the Vanguard Advice Select Global Value Fund

Manager: Wellington Management Company LLP

Strategy: Invests primarily in mid- and large-cap companies located outside the U.S. believed to offer a good balance between reasonable valuations and attractive growth prospects relative to their peers. Looks to diversify its assets in countries across developed and emerging markets.

View the Vanguard International Core Stock Fund


Why we believe these 5 funds work well together

With this bundle, the whole is greater than the sum of its parts. Here's why these 5 funds were carefully constructed for advice clients:

  • The right balance: Combined, these funds balance value stocks with growth stocks, cover the full spectrum of market-cap exposures, and balance defensive and aggressive strategies. They approximate a 60% U.S./40% non-U.S. stock portfolio.
  • Proven managers: They leverage 3 of Vanguard's largest and longest-tenured strategic partners through 5 complimentary and exclusive strategies.
  • Optimal risk/reward potential: These funds place bigger bets on fewer companies. They leverage the skills of top managers, which can lead to superior investment outcomes. 

Meet the 3 world-class managers behind the funds

Vanguard has a long history of partnering with the world's leading investment managers, and Wellington, PRIMECAP, and Baillie Gifford are among the best in the business. Because we're focused on the long term, we build loyal and lasting relationships with external managers who aren't only experts in their craft but also share our philosophy and values. 

Partner Vanguard client assets under management Summary

Wellington Management Company LLP

Founded: 1928

Vanguard partner since: 1975

 $392 billion†† Wellington is famously where Jack Bogle, Vanguard's founder, started his career and is today among the nation's oldest and most respected investment managers.

PRIMECAP Management Company

Founded: 1983

Vanguard partner since: 1984

 $89 billion†† PRIMECAP manages U.S.-focused stock portfolios for a limited number of institutions and mutual funds and is recognized for its long-term approach to growth stock investing.

Baillie Gifford Overseas Ltd.

Founded: 1908

Vanguard partner since: 2003

 $39 billion†† Baillie Gifford is among the largest independently owned investment firms in the United Kingdom, and its ownership structure allows the company to focus wholly on its clients and investments.

Active Select could be a smart decision for your financial future if you have the patience and risk tolerance necessary for active investing. It's just one more way we're helping advice clients reach their financial goals through a personalized investing experience.

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*Source: Vanguard Investment Advisory Research Center calculations, using data from Morningstar, Inc. Fund performance as of June 30, 2023. The performance of each Vanguard fund was compared with that of its stated benchmark using monthly return data ended June 30, 2023. The monthly returns for all Vanguard active equity funds, including those that were merged or liquidated during the period, were included in the performance calculations. The active equity portions of Vanguard balanced funds were excluded. Annualized asset-weighted excess returns were generated by calculating the asset-weighted cross-section monthly returns and then generating a time series set of returns. All fund performance data are net of fund expense ratios. 

**Source: Morningstar, Inc., as of June 30, 2023.

***Source: Lipper, a Thomson Reuters Company, as of June 30, 2023.

†Vanguard is owned by its funds, which are owned by Vanguard's fund shareholder clients. Our retail direct investment advisory strategies, in turn, are built on core investments in the Vanguard funds.

††Data as of June 30, 2023.
 

Vanguard's advice services are provided by Vanguard Advisers, Inc. ("VAI"), a registered investment advisor, or by Vanguard National Trust Company ("VNTC"), a federally chartered, limited-purpose trust company.

The services provided to clients will vary based upon the service selected, including management, fees, eligibility, and access to an advisor. Find VAI's Form CRS and each program's advisory brochure here for an overview.

VAI and VNTC are subsidiaries of The Vanguard Group, Inc., and affiliates of Vanguard Marketing Corporation. Neither VAI, VNTC, nor its affiliates guarantee profits or protection from losses.

All investing is subject to risk, including the possible loss of money you invest.

Diversification does not ensure a profit or protect against a loss.

For more information about Vanguard funds, obtain a mutual fund prospectus or, if available, a summary prospectus. Investment objectives, risks, charges, expenses, and other important information are contained in the prospectus; read and consider it carefully before investing.