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Portfolio > Asset Managers

Vanguard Personal Advisor Services to Add 3 New Active Equity Funds

By Bernice Napach

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What You Need to Know

  • Vanguard PAS expects to add three new active equity fund options in the fourth quarter of 2021.
  • They include the Vanguard Advice Select Dividend Growth Fund and Vanguard Advice Select Global Value Fund.
  • Vanguard Advice Select International Growth Fund is the third fund. All three have relatively low fees.

Vanguard Personal Advisor Services, the mutual fund giant’s digital advisor service that includes human advisors, is planning to add three new active equity mutual funds to its investment options in the fourth quarter.

Vanguard PAS has filed a registration statement with the Securities and Exchange Commission to launch the Vanguard Advice Select Dividend Growth Fund, Vanguard Advice Select Global Value Fund and Vanguard Advice Select International Growth Fund.

Once added, the funds will be part of a five-fund equity offer from Vanguard Personal Advisor Services, which requires a $50,000 minimum and charges a 0.30% annual fee. Vanguard International Core Fund and Vanguard Capital Opportunity Fund are the other active equity funds offered as part of PAS.

In a press release, Vanguard said the funds will complement diversified and lost-cost index core portfolio holdings in PAS accounts. It 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 will assess the suitability of the funds for client portfolios.

“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,” said Jon Cleborne, head of Vanguard Personal Advisor Services, in a statement.

“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,” said Matt Benchener, managing director of Vanguard Retail Investor Group, in a statement.

Here’s a lowdown on the three funds:

  • Vanguard Advice Select Dividend Growth Fund will focus on financially sound, large-cap companies across a diverse range of sectors that have prospects for long-term total returns due to their ability to grow earnings and willingness to increase dividends over time. The fund is a more concentrated version of the strategy used in the Vanguard Dividend Growth Fund and will be managed by Wellington Management Co. LLP with an estimated expense ratio of 0.45%.
  • Vanguard Advice Select Global Value Fund will invest in discounted companies that are avoided or overlooked by the market. It is an all-cap global fund also managed by Wellington Management, with an estimated expense ratio of 0.40%.
  • Vanguard Advice Select International Growth Fund will use a bottom-up equity strategy, analyzing the fundamentals of individual companies rather than broad sectors or industries, to focus 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 the  Vanguard International Growth Fund. Its estimated expense ratio is 0.42%.

All three funds have expense ratios that are one-third to one-half the average expense ratio of  similar actively managed equity funds, according to Vanguard.

As of June 30, Vanguard Personal Advisor Services had $243 billion in assets. Its parent company had $8 trillion in global assets as of July 31.

Bernice Napach

@Think_Napach

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