Vanguard replaced its in-house quantitative equity manager, Vanguard Quantitative Equity Group, as an adviser on two of its funds: the Vanguard Growth and Income Fund and the Vanguard U.S. Growth Fund.
Wellington Management Co. has been added as an adviser to the $11.5 billion Growth and Income Fund; while the portion of the $34.4 billion U.S. Growth Fund advised by Wellington will increase, said a Friday news release.
Specifically, as a result of these changes, the allocations for the Growth and Income Fund will now be 33% each for Wellington, Los Angeles Capital Management and D. E. Shaw Investment Management, said a company spokesman by email.
For the Vanguard U.S. Growth Fund, the new allocations will be Wellington, 50%; Jennison Associates, 30%; and Baillie Gifford Overseas, 20%, the spokesman added.
Prior to these changes, Wellington managed 30% of the U.S. Growth Fund, while QEG managed 20%, the spokesman indicated.
Year to date through May 25, the Growth and Income Fund has gained 7.2%, while the U.S. Growth Fund has climbed 20.8%.
QEG will remain as "one of Vanguard's largest and longest-tenured advisors, continuing to manage more than $30 billion in Vanguard client assets across 23 mandates globally," the spokesman added.
Also, as a result of these changes, the Growth and Income Fund will no longer use a solely quantitative approach to security selection, the release noted. Existing advisers Los Angeles Capital Management and D. E. Shaw will "continue to use their current quantitative investment processes, and Wellington Management will deploy a fundamental approach to security analysis."
Vanguard further said in the release that the advisers' "complementary investment processes will enhance the fund's ability to add long-term value for shareholders."
With respect to the U.S. Growth Fund, each adviser has a "distinct yet complementary approach to growth investing," the release noted, adding that the fund's investment objective and principal investment strategies will remain the same.
Vanguard also said the expense ratios for both funds will increase as a result of the changes in adviser arrangements.
For the Growth and Income Fund, the changes are expected to increase the fund's expense ratios to 0.37% for investor shares and 0.27% for admiral shares, from 0.32% and 0.22%, respectively.
For the U.S. Growth Fund, expense ratios are expected to rise to 0.35% for investor shares and 0.25% for admiral shares, from 0.33% and 0.23%, respectively.
As of Dec. 31, 2022, Wellington oversaw $392 billion of Vanguard fund assets globally, making it Vanguard's largest external adviser, the release indicated.
As of April 30, Vanguard's total AUM was $7.7 trillion, the spokesman added.
