Vanguard Group on Thursday dropped AXA Rosenberg from its lineup of subadvisers. The quant firm was managing just less than $1.5 billion combined in three Vanguard mutual funds.
The decision “wasn't based on any single issue,” but rather the same “broad-based assessment of the firm” that Vanguard applies to all of its subadvisers, said Vanguard spokeswoman Rebecca Katz, who declined to provide further details “out of respect for AXA.”
An AXA Rosenberg spokesman, in an e-mailed response to questions, said “We highly value the relationship we have with Vanguard and respect their choice.”
With the decision, the roughly 12%, or $1.1 billion, of the $8.9 billion Vanguard Explorer Fund that AXA Rosenberg had overseen as of July 31, will be apportioned to some of that fund's six remaining subadvisers: Granahan; Century Capital; Kalmar; Wellington; Chartwell; and Vanguard Quantitative Equity Group.
Ms. Katz said details of how much more money specific firms have received to manage won't be available until the fund's next annual report comes out in October.
The $320 million that AXA Rosenberg managed for the $492 million Vanguard U.S. Value Fund will be taken over by Vanguard Quantitative Equity Group, which becomes the fund's sole adviser.
Likewise, the $38 million of the $84 million Vanguard Market Neutral Fund that AXA Rosenberg managed will be taken over by Vanguard Quantitative Equity Group, leaving it again as the sole adviser.
AXA Rosenberg made a series of high-level personnel and organizational changes after a coding error discovered in the company's computer programs in mid-2009, and fixed by that November, wasn't brought to the attention of the company's board until well into 2010. As a result of those changes, the firm's once highly independent research arm reports directly to the company's CEO.
The company's spokesman, in the same e-mailed response, said “AXA Rosenberg remains committed to our clients in the U.S. and around the world and we believe the changes we have recently made to our ownership, management and organizational structures will serve them well.”
Vanguard becomes the latest client to terminate AXA Rosenberg since the firm, in an April 15 letter to clients and consultants, first informed them about the coding error. For the latest quarter ended June 30, AXA Rosenberg's assets under management dropped 40% to $37 billion.