MONEY MANAGEMENT

Vanguard taps 3 to replace AllianceBernstein as value equity subadviser

Vanguard Group on Thursday announced it terminated AllianceBernstein (AB) as a subadviser of more than $5 billion in value equity assets for three of Vanguard's multimanager offerings.

AllianceBernstein is being replaced by Pzena Investment Management for about 28% portion of Vanguard's $12.1 billion Windsor Fund, and ARGA Investment Management for 21% of the $6.1 billion Vanguard International Value Fund.

Also, Baillie Gifford Overseas will now subadvise an additional 13% of the $3.7 billion Vanguard Global Equity Fund, lifting its overall portion of the fund to 19%.

Vanguard spokesman David Hoffman in an e-mail noted that performance is one of many factors Vanguard takes into account in evaluating managers. “It's been an extremely difficult period for deep value managers and AllianceBernstein is no exception,” he added.

AllianceBernstein had been a subadviser on the Windsor Fund since 1999, the International Value Fund since 2004 and the Global Equity Fund since 2006.

On a conference call Thursday morning about AllianceBernstein's results for the quarter ended June 30, Peter Kraus, the company's chairman and CEO, said Vanguard's move would reduce AllianceBernstein's July AUM but wouldn't have a material financial impact.

Pzena has managed assets for Vanguard since 2005, in its U.S. Fundamental Value Fund and Emerging Markets Select Stock Fund. By contrast, ARGA Investment Management was launched in 2010 by Rama Krishna, former Pzena chief investment officer; Mr. Hoffman cited Vanguard's familiarity with Mr. Krishna as one factor adding to Vanguard's comfort with the new firm.