Active Strategy

Advice + active: A powerful combination

Tailoring your portfolio for potential outperformance

An exclusive strategy from Vanguard Personal Advisor Services

A proven track record

Vanguard’s actively managed funds have delivered substantial outperformance over long time periods.*

World-class expertise

We partner with leading fund managers from around the world, giving you access to top-tier talent at a low cost.

Customized just for you

Your tailored active recommendation is just one more way your advisor can personalize your portfolio. Here’s the info you need to get ready for your assessment.

How we make active investing personal

Looking for greater portfolio customization and the chance for increased returns?

Vanguard Personal Advisor Services® has enhanced our approach to incorporating actively managed funds in your portfolio. The evolution in our strategy is fueled by Vanguard’s industry-leading active expertise and leverages world-class talent who have a history of delivering results for Vanguard investors.

Active investing isn’t right for everyone—it inherently carries greater risk and cost. But in the right circumstances, it can give you a chance to get closer to your goals.

 

Our success with active

As a whole, active funds can struggle to meet their goal of benchmark outperformance,** mainly because of the accompanying higher costs they need to overcome. But at Vanguard, we’ve developed a rigorous, disciplined approach that’s led to sustained success.*

That’s partly thanks to our low costs.*** The other half of the equation is the world-class fund managers we partner with.

Our formula for active investing

Our results prove it: Active Vanguard funds that outperformed their peer-group averages*

Personalizing active recommendations

Talented managers and low costs are critical for successful active funds, but when it comes to your personal success with active, there’s a third component—patience.

Our clients know how to wait out market downturns and short-term movements. But active investing requires even more patience than index investing, because it’s almost guaranteed there will be periods when the market’s doing well but your active funds aren’t. You need to be ready to endure these periods of underperformance—sometimes extended ones—to reap any benefits over the long run.

Your financial situation also plays a part. For example, investors with tax-advantaged accounts and long-term goals can benefit more from active, since they can shield more-frequent distributions from taxes and wait out periods of underperformance.

Your advisor will consider your:

  • Comfort with extreme volatility and periods of underperformance.
  • Conviction in the potential value of active and willingness to pay extra costs and take on additional risk. 
  • Investment timeline, and whether it will allow you to realize the long-term growth potential of the active strategy. 
  • Tax situation, and whether it’s financially advantageous for you to invest in funds that are expected to have a higher tax burden than index funds.

The combination of advice + active can lead to powerful results.

Explore our active roots and capabilities

Cost, talent, and patience have given us an edge when it comes to active investing.

See how teams from around Vanguard and around the world collaborate to find opportunities for our clients.

Successful investing requires a disciplined approach.

Potential outperformance at a fraction of the industry cost***

The 5 stock funds included in Vanguard Personal Advisor's active strategy are thoughtfully designed and managed by top-tier portfolio managers who have a history of delivering results for Vanguard clients.

This strategy gives you the opportunity to outperform the global stock market at a fraction of the industry cost.

This aggressive growth fund invests in companies of various sizes that the managers believe will grow in time, but may be volatile in the short-term. The fund managers have a long-term perspective and ignore short-term market ”noise.“ This investment approach, coupled with a focus in certain market sectors, including information technology and health care, helps differentiate the fund from its benchmark and peer funds.

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Fund manager: PRIMECAP Management Company

Expense ratio: 0.36% (68% less than average)***

The International Growth Fund focuses on non-U.S. companies with high growth potential. The fund employs an aggressive approach that attempts to capitalize on global economic expansion. For example, an attractive investment opportunity could be a non-U.S. consumer-products company that is experiencing rapid earnings growth. Because it invests in non-U.S. stocks, including those in developed and emerging markets, the fund can be more volatile than a domestic fund.

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Fund manager: Baillie Gifford Overseas Ltd.

Expense ratio: 0.42% (63% less than average)***

This fund is designed to provide investors with some income while offering exposure to dividend-focused companies across all industries. The fund focuses on high-quality companies that have both the ability and the commitment to grow their dividends over time. One of the fund’s risks is the possibility that returns from dividend-paying stocks will trail returns from the overall stock market during any given period. Another risk is the volatility that comes with the fund's full exposure to the stock market.

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Fund manager: Wellington Management Company LLP

Expense ratio: 0.45% (49% less than average)***

The fund will provide global, all-cap, contrarian value exposure by investing in discounted companies that are being avoided or overlooked due to uncertainty or complacency. The investment style involves identifying deeply mispriced companies with moderate risk expectations and blends it with strategies designed to exploit inefficiencies in the market, and in particular those created by behavioral biases.

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Fund manager: Wellington Management Company LLP

Expense ratio: 0.40% (63% less than average)***

This actively managed fund offers exposure to developed and emerging non-U.S. markets and will be diversified across a range of sectors. The fund’s advisors look to construct a portfolio that blends growth and value styles to serve as a core holding in a globally balanced portfolio. Because it invests in non-U.S stocks, the fund can be more volatile than a U.S. stock fund.

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Fund manager: Wellington Management Company LLP

Expense ratio: 0.35% (72% less than average)***


Your personalized recommendation is coming

Before your next appointment, you’ll receive an email invitation to begin your assessment. At the appointment, your advisor will review your assessment, go over your personalized recommendation, and answer any questions.

Still have questions? More about our active strategy

Vanguard—the third-largest active fund manager in the world—has always believed that both active and index investments can be appropriate and beneficial, depending on your tolerance for the inherent risks associated with active investing.

Because of this, active investing is an important part of our portfolio construction methodology, and many of our clients are invested in active funds. We’re evolving our strategy and launching new funds to meet the preferences and needs of clients who seek greater portfolio personalization and the potential for long-term investment outperformance.

Read more about how active investing can personalize your strategy.

Our team dedicated to fund oversight began by considering a wide range of potential active strategies. They prioritized strategies that have already been successfully implemented by some of the most renowned fund managers in the world—fund managers who have a history of delivering results for Vanguard investors. The chosen strategies are based on thorough, proprietary research that can uncover valuable insights not reflected in raw data and thus being overlooked by the markets.

Two of the funds selected for the strategy are existing Vanguard funds. The other 3 funds are new.

The enhanced active strategy uses funds that are more concentrated in terms of their number of holdings. We believe these funds are most appropriate as part of an advised portfolio because advisors can ensure our clients understand what to expect from the funds, their allocations are consistent with their risk tolerance, and they’re supported and coached through periods of underperformance.

Vanguard Personal Advisor Services will continue to recommend active funds for the bond portion of client portfolios where it makes strategic sense. Almost half of our clients’ bond portfolios are currently invested in active funds, and we expect that to continue.

The assessment will walk you through a few questions designed to help your advisor understand your desire for and conviction in an active strategy, as well as your comfort with active risk. The active strategy can and likely will lead to periods of underperformance that are of greater length, magnitude, and frequency than you’d experience with index investing.

In addition, your advisor will review your goals and portfolio to make sure active is a good fit for your personal situation.

Once the assessment is complete, your advisor will meet with you to walk through the recommendation and answer questions. If you’re already invested in active funds, your advisor will help you determine whether it’s more advantageous to keep your current active funds or implement the new strategy.

*For the three-year period ended March 31, 2022, 6 of 6 Vanguard money market funds, 50 of 54 bond funds, 8 of 11 balanced funds, and 29 of 46 stock funds—for a total of 93 of 117 Vanguard funds—outperformed their Lipper peer-group averages. For the five-year period ended March 31, 2022, 6 of 6 Vanguard money market funds, 49 of 51 bond funds, 6 of 7 balanced funds, and 27 of 39 stock funds—for a total of 88 of 103 Vanguard funds—outperformed their Lipper peer-group averages. For the 10-year period ended March 31, 2022, 6 of 6 Vanguard money market funds, 41 of 44 Vanguard bond funds, 6 of 6 Vanguard balanced funds, and 29 of 37 Vanguard stock funds—for a total of 82 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

**Over the past 15 years, only about 37% of active stock fund managers and 19% of active bond fund managers have outperformed their designated benchmarks. Sources: Vanguard calculations, using data from Lipper, a Thomson Reuters Company. Based on funds’ excess returns relative to their prospectus benchmark for the 15-year period ended March 31, 2020. Only funds with a minimum 15-year history were included in the comparison. Results for other periods will vary.

***The Lipper category for Vanguard Advice Select International Growth Fund is international large-cap growth with an average expense ratio of 1.13%. The Lipper category for Vanguard Advice Select Global Value Fund is global multi-cap value with an average expense ratio of 1.09%. The Lipper category for Vanguard Advice Select Dividend Growth Fund is large-cap core with an average expense ratio of 0.89%. The Lipper category for Vanguard International Core Stock Fund is international large-cap core with an average expense ratio of 1.23%. The Lipper category for Vanguard Capital Opportunity Fund is multi-cap growth with an average expense ratio of 1.12%. Source: Lipper, a Thomson Reuters Company, as of December 31, 2021.

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

All investing is subject to risk, including the possible loss of the money you invest. Diversification does not ensure a profit or protect against a loss. There is no guarantee that any particular asset allocation or mix of funds will meet your investment objectives or provide you with a given level of income.

Advice services are provided by Vanguard Advisers, Inc., a registered investment advisor, or by Vanguard National Trust Company, a federally chartered, limited-purpose trust company.