Vanguard PAS to Introduce 3 Active Equity Funds
Vanguard today filed initial registration statements with the Securities and Exchange Commission to launch three new active equity mutual funds: Vanguard Advice Select Dividend Growth Fund, Vanguard Advice Select Global Value Fund, and Vanguard Advice Select International Growth Fund. The funds are expected to launch in the fourth quarter of 2021 and will be available exclusively to clients of Personal Advisor Services (PAS), Vanguard’s industry-leading advice offer1 that combines sophisticated and customized portfolio management, financial planning tools, and a virtual experience with the behavioral coaching and guidance of a financial advisor. The funds will be made available for PAS clients investing through their advised portfolios as part of a five-fund active equity offer, along with two existing products—Vanguard International Core Fund and Vanguard Capital Opportunity Fund.
The active equity offer will primarily serve as a complementary allocation to PAS clients’ broadly diversified and low-cost index fund core portfolio holdings. Vanguard believes the funds’ concentrated, higher-alpha strategies are an ideal fit for PAS clients with sufficient risk tolerance and patience for active exposure as they can materially impact portfolio performance even at a relatively small allocation. PAS advisors will assess suitability and ensure the funds are prudently incorporated into their clients’ portfolios.
“We are enhancing our world-class investment lineup by introducing a thoughtfully designed, active equity offer to Personal Advisor Services,” said Matt Benchener, managing director of Vanguard Retail Investor Group. “Vanguard has delivered consistent and sustained outperformance as a leader in active investment management,2 and the introduction of this active equity offer will build upon that success. The funds, managed by top-tier portfolio managers, will enable more personalized portfolio construction and provide the potential to drive improved client outcomes over the long-term.”
PAS portfolios currently utilize both active and passive fixed income and equity products to meet client preferences and needs. The new offer will deliver global active equity exposure through a combination of five single-manager funds, including the three new funds:
- Vanguard Advice Select Dividend Growth Fund will seek to outperform the broader U.S. market, focusing on financially sound, large-cap companies across a diverse range of sectors that have prospects for long-term total returns, as a result of their ability to grow earnings and their willingness to increase dividends over time. A more concentrated version of the strategy used in Vanguard Dividend Growth Fund, the fund will be managed by Wellington Management Company LLP and will have an estimated expense ratio of 0.45%, compared with the average expense ratio for large-cap core funds of 0.90%.3
- Vanguard Advice Select Global Value Fund will provide global, all-cap, contrarian-value exposure by investing in discounted companies that are being avoided or overlooked. The fund will be managed by Wellington Management Company LLP and will have an estimated expense ratio of 0.40%, compared with the average expense ratio for global multi-cap value funds of 1.10%.4
- Vanguard Advice Select International Growth Fund will employ a bottom-up equity strategy—analyzing the fundamentals of specific companies instead of broad sectors or industries—focused on exceptional international growth companies. The fund will be managed by Baillie Gifford Overseas Ltd., as a more concentrated version of the strategy used in Vanguard International Growth Fund. The fund will have an estimated expense ratio of 0.42%, compared with the average expense ratio for international large-cap growth funds of 1.13%.5
“Patience, discipline, and a long-term perspective are central to Vanguard’s investment philosophy and portfolio construction methodology, and are especially vital for active management,” said Jon Cleborne, head of Vanguard Personal Advisor Services. “Active management is particularly well-suited for advised portfolios because advisors can ensure expectations are managed appropriately, allocations are consistent with risk tolerance, and clients are supported and coached through periods of underperformance.”
About Vanguard Personal Advisor Services
Vanguard’s focus on advice is directly aligned with the firm’s mission to give investors the best chance for investment success. Vanguard firmly believes advice drives better outcomes for investors and is committed to making it more accessible, affordable, and personal.
PAS advisors work with their clients to identify investment goals and develop personalized and complete financial plans and portfolios designed to achieve them. Additionally, PAS clients receive ongoing portfolio rebalancing, tax efficient management, and continuous guidance from an advisor to navigate complexities such as Social Security optimization, Medicare selection, retirement drawdown strategies, estate and tax planning, and charitable giving. PAS advises $243 billion, as of June 30, 2021.
Vanguard is one of the world’s largest investment management companies. The firm, headquartered in Valley Forge, Pennsylvania, offers 418 funds to its more than 30 million investors worldwide. For more information, visit vanguard.com.
1 Vanguard Personal Advisor Services advises $243 billion, as of June 30, 2021.
2 For the 10-year period ending December 31, 2020, 86% of Vanguard active funds outperformed their peer group averages (source: Lipper, a Thomson Reuters Company).
3, 4, 5 Source: Lipper, a Thomson Reuters Company, as of June 30, 2021.
Registration statements relating to Vanguard Advice Select Dividend Growth Fund, Vanguard Advice Select Global Value Fund, and Vanguard Advice Select International Growth Fund have been filed with the Securities and Exchange Commission (SEC) but have not yet become effective. The SEC has not approved or disapproved these securities or passed upon the adequacy of either fund’s preliminary prospectus. Any representation to the contrary is considered a criminal offense. These securities may not be sold nor may offers to buy be accepted prior to the time the registration statements become effective. This communication shall not constitute an offer to sell or the solicitation of an offer to buy, nor shall there be any sale of, these securities in any state in which such offer, solicitation, or sale would be unlawful prior to registration or qualification under the securities laws of any such state.
For more information about Vanguard funds, 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.
Investments in securities issued by non-U.S. companies and governments are subject to risks including country/regional risk and currency risk. These risks are especially high in emerging markets.
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.
The services provided to clients who elect to receive ongoing advice will vary based upon the amount of assets in a portfolio. Please review the Form CRS and Vanguard Personal Advisor Services Brochure for important details about the service, including its asset-based service levels and fee breakpoints.
VAI is a subsidiary of VGI and an affiliate of VMC. Neither VAI nor its affiliates guarantee profits or protection from losses.
Vanguard Marketing Corporation, Distributor.