Vanguard adding core international active equity fund

July 18, 2019

 

Vanguard today filed a registration statement with the U.S. Securities and Exchange Commission for the proposed launch of Vanguard International Core Stock Fund, an actively managed international equity fund that is expected to be available during the fourth quarter of 2019. The Fund will offer broad exposure to non-U.S. stocks and blends growth and value styles.

The fund will expand Vanguard's existing international fund lineup, offering an active alternative to the Vanguard Total International Stock Index Fund by providing a broad actively managed single-fund solution in non-U.S. developed and emerging markets, and is designed to serve as a core holding in a globally balanced portfolio.

The fund will be managed by Wellington Management Company LLP (Wellington Management). Wellington Management, a world-class investment organization and Vanguard's largest sub-advisory partner, has deep, global research capabilities across geographies and a long history of investing in non-U.S. markets.

The investment team will be led by Kenneth L. (Kenny) Abrams, a senior managing director and equity portfolio manager, and F. Halsey Morris, CFA, a senior managing director and global industry analyst. Mr. Abrams, a longtime portfolio manager for Vanguard Explorer™ Fund, has employed Wellington Management's Global Perspectives strategy for 12 years with a focus on mid- and small-capitalization companies.  In the new fund, the strategy will also be applied to the large-cap international universe.

"Kenny is a talented investor who has delivered outstanding investment performance, and is an exceptional leader who has proven his ability to effectively leverage Wellington Management's expansive, industry-leading resources," said Matthew Brancato, head of Vanguard's Portfolio Review Department. "He's constructed a team that seeks to identify attractive opportunities in non-U.S. markets through a repeatable and enduring process."

The investment strategy for the fund will employ a multi-disciplinary approach that identifies attractive, high return potential opportunities by leveraging the full breadth and depth of Wellington Management's global resources: Global Industry Analyst research; positions held by Wellington Management's Investment Boutique teams; investment ideas from Wellington Management's quantitative research teams; macro-economic research; and ESG research that emphasizes positive governance practices. The fund will be differentiated and benefit from this unique, multi-disciplined approach that systematically incorporates the best investment ideas at Wellington Management and is designed to reduce downside risk, improve upside capture, and minimize unintended bets.

Wellington Management's approach is characterized as opportunistic, and does not emphasize any particular style or factor. The team seeks to build an "all weather" portfolio that prioritizes stock-specific alpha potential, limiting the portfolio's style, factor, region, and industry risk exposure through a sophisticated and centralized risk management approach.

The International Core Stock Fund will offer Admiral™ Shares and Investor Shares. Estimated expense ratios for the new fund will be 0.35% for Admiral Shares and 0.45% for Investor Shares, both well below the asset-weighted average expense ratio of 0.75% for the industry's foreign large-cap blend category.1 The fund will be benchmarked to the MSCI ACWI ex USA Index.

The International Core Stock Fund is the third actively managed fund that Vanguard has announced this year, building on the recent launches of Vanguard Global ESG Select Stock Fund and Vanguard Commodity Strategy Fund.

As of March 31, 2019, Vanguard had $1.3 trillion in assets under active management—making it the industry's third-largest manager of actively managed assets.2 Of that, $607 billion was managed by external investment advisory firms.

Vanguard's active funds have consistently outperformed peers over various time periods3. We attribute our enduring outperformance to three key factors: our exceptional investment talent, our proven, disciplined approach, and our unique alignment with our clients.

Our global scale and long-term focus allow us to attract world-class investment professionals without compromising our commitment to low costs. We employ highly skilled and carefully selected investment managers, both internally and externally, to oversee a full roster of active mandates.

Vanguard has more than 40 years of experience in selecting and partnering with active managers. Our time-tested approach is rooted in an adherence to consistent, repeatable processes over time, and a long-term perspective. We look to build loyal and lasting relationships with our managers and enter every partnership confident it will be mutually beneficial to us, them, and—most importantly—our clients.

In managing our active funds, we believe that a prudent approach to risk, unambiguous decision-making, and enduring yet adaptable processes are critical to achieving long-term success in active management. These beliefs are ingrained in each component of our active management approach.

Our focus on creating the best outcomes for our clients extends beyond what we do—it's who we are. We're built from the ground up to align our interests with those of our clients. At Vanguard, our success is inextricably tied to the success we create for our clients and we remain squarely focused on delivering long-term value for them.

1 Source: Morningstar, Inc., as of March 31, 2019.

2 Source: Morningstar, Inc., as of March 31, 2019.

3 Source: Lipper, a Thomson Reuters Company.
Number of Vanguard actively managed funds that outperformed their Lipper peer-group averages for periods ended March 31, 2019. For the one-year period, 96 of 127 Vanguard funds; for the three-year period, 88 of 114 Vanguard funds; for the five-year period, 98 of 106 Vanguard funds; for the ten-year period, 88 of 100 Vanguard funds. Results will vary for other time periods. Only funds with a minimum of one-, three-, five-, or ten-year history, respectively, were included in the comparison.
Note that the competitive performance data shown represent past performance, which is not a guarantee of future results, and that all investments are subject to risks. For the most recent performance, visit our website at vanguard.com/performance.

Notes:

  • A registration statement relating to Vanguard International Core Stock Fund has been filed with the Securities and Exchange Commission but has not yet become effective. These securities may not be sold nor may offers to buy be accepted prior to the time the registration statement becomes 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 advisors.vanguard.com or call 800-997-2798 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. Copies of the final prospectus can be obtained from Vanguard. Please note that a preliminary prospectus is subject to change.
  • All investing is subject to risk, including the possible loss of the money you invest. Investments in securities issued by non-U.S. companies and governments are subject to risks including country/regional risk and currency risk. Diversification does not ensure a profit or protect against a loss.
  • All asset figures are as of March 31, 2019, unless otherwise noted.
  • CFA® and Chartered Financial Analyst® are registered trademarks owned by CFA Institute.
 

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