In August, we covered Vanguard’s plans to open a new actively managed international stockA financial instrument giving the holder a proportion of the ownership and earnings of a company. fund, International Core Stock. Following a two-week subscription period, the fund began trading mid-October.
International Core StockA financial instrument giving the holder a proportion of the ownership and earnings of a company. is yet another partnership with Vanguard’s oldest sub-advisory partner, Wellington Management. The fund will be run by Ken Abrams and Halsey Morris, who both have Ivy League pedigrees and ample experience. In our opinion, Abrams is one of Wellington’s brightest stars. That said, during his tenure managing money for Vanguard, he’s been a small-cap stock specialist as one of the better performing spokes in the Vanguard Explorer fund’s wheel, while International Core Stock is categorized as a “large blend” fund that will likely hold stocksA financial instrument giving the holder a proportion of the ownership and earnings of a company. from companies of all sizes. (You can read more about our take on Abrams and Morris here.)
The fund’s portfolio is expected to consist of between 60 and 100 non-U.S. stocks picked from what Vanguard is calling an “opportunity set” of 350 to 400 companies in emerging and developed markets identified by Wellington’s research analysts. The fund is benchmarked against the MSCI ex USA Index, the former benchmark for Vanguard’s Total International Stock Index fund. Annual expenses run 0.45% for Investor shares and 0.35% for Admiral shares, which have $3,000 and $50,000 minimum required investments, respectively.
We expect the new fund to face stiff competition from Vanguard’s International Growth fund, which has produced stellar returns when measured against both its Total International Stock Index fund and the MSCI ex USA Index. (As always, remember that past returns do not guarantee future results.) If International Core Stock can keep up, outperform or provide a complementary riskThe probability that an investment will decline in value in the short term, along with the magnitude of that decline. Stocks are often considered riskier than bonds because they have a higher probability of losing money, and they tend to lose more than bonds when they do decline./return profile, Vanguard investors will have another solid option to consider for their portfolios.
But it’s too soon to say. We won’t get a look inside the new fund’s portfolio until mid-November and it will also take some time for the fund to build up enough of a track record to analyze. We’ll be watching with interest.
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