Home Latest Commentary chevron_right Adviser Fund Update Vanguard Packs Another Manager Into International Explorer September 2, 2020 Table of Contents Vanguard Packs Another Manager Into International Explorer New Leadership Coming to Top Vanguard Sub-Adviser Podcast: What’s So Great About Gold? Special Report: The ETF Advantage Adviser Investments’ Market Takeaways Vanguard Packs Another Manager Into International Explorer No lazy days at the beach for Vanguard this summer. The fund giant wrapped up a busy few months by rethinking the management structure of its $2.4 billion International Explorer fund last week, bringing Baillie Gifford onto a roster that already included Schroder Investment Management, Wellington Management and TimesSquare Capital. The addition of Baillie Gifford to International Explorer marked a reversal of sorts for Vanguard. In recent years, they have retreated from a tendency to pack funds with too many managers—something that we strongly oppose because it waters down performance against an index. But here comes a new multimanager muddle. Baillie Gifford is having its moment in the sun in Malvern, Pa. With the 10% management stake in International Explorer, the firm has more investment “mandates” than any outside manager at Vanguard except Wellington Management. The Scotland-based investment firm manages portions of U.S. Growth, Global Equity, International Growth and Emerging Markets Select Stock. They also oversee a portion of the International Variable Annuity portfolio, giving them some $45 billion in Vanguard investor assets under management. Many Mandates and $45 Billion in Assets wdt_ID Fund Size (Billions) Baillie Gifford's Share Assets Managed 1 International Growth 51.4 66.0 34.0 2 U.S. Growth 35.8 15.0 5.4 3 Global Equity 6.8 50.0 3.4 4 International Variable Annuity 4.5 60.0 2.7 5 International Explorer 2.4 10.0 0.2 6 Emerging Markets Select Stock 0.7 25.0 0.2 7 Total 45.3 Source: Vanguard. (The PRIMECAP Management team, another Vanguard sub-adviser, runs even more money, with three funds and a variable annuity under its purview totaling more than $90 billion under management.) Is Baillie Gifford being spread too thin at Vanguard? Possibly. The move might lend a fresh perspective to International Explorer for a time, but adding a fourth team to lead this international small-cap fund doesn’t seem like a smart move overall. Vanguard’s multimanager approach purports to reduce the risk of a single manager exiting the firm or placing a bad bet that takes the portfolio down. But it also limits the ability of a manager to have a cohesive vision and add value for shareholders. Likewise, it leaves investors with less insight into how their money is being managed and leads to lower transparency into how and what each manager is contributing. Schroders is the loser here, seeing its allocation cut from 50% to 40%, while Wellington retains its 30% slug. Could Vanguard be building toward reducing headcount at the fund over the next year or two as Baillie Gifford gets its bearings? We’ll be watching. New Leadership Coming to Leading Vanguard Sub-Adviser We noted above that Wellington Management leads the pack of Vanguard sub-advisers when it comes to assets under management. And come next summer, there’ll be a new leader at Wellington’s helm. In breaking news yesterday, Wellington announced that Jean Hynes will be succeeding Brendan Swords as CEO of the Boston-based investment group when he retires at the end of June 2021. One of Wellington’s three managing partners, Hynes joined the firm in 1991 upon graduation from Wellesley College. She also serves as a global industry analyst covering pharmaceuticals and biotech. “I’m excited that Jean Hynes will be my successor,” said Mr. Swords in a press release. “Over the course of her nearly 30 years at the firm, she has demonstrated the vision, optimism, and fortitude to lead Wellington in the years ahead.” Hynes has been the sole manager of the $49.0 billion Vanguard Health Care fund since 2013 after being added as a co-manager in 2008. The plan is for her to continue running the portfolio following her appointment to Wellington’s top job. Podcast: What’s So Great About Gold? Even following its recent surge, making it one of the highest-flying investments of 2020, the merits of gold as an investment must-have remain hotly contested. For every passionate goldbug, there’s someone else dismissing it as a fringe fad. Listen to this lively discussion between Adviser Investments Director of Research Jeff DeMaso and Quantitative Investments Manager Josh Jurbala as they present the evidence you need to decide if this polarizing investment option is right for you, including: Why is gold having such a breakout year? What are the arguments for and against investing in gold? What risks may gold present in your portfolio? Is gold really an effective inflation hedge? …and much more! Gold has held a long and prominent place in investment history, but the debates about its true worth can create more questions than answers. For a definitive look at the potential benefits and drawbacks for investors, click here to listen now! Special Report: The ETF Advantage—Benefits and Risks of Exchange-Traded Funds Exchange-traded funds (ETFs) are an increasingly popular investment option that may be a worthy addition to your portfolio. But they remain a bit of a mystery for many investors. This special report, available exclusively from Adviser Investments, provides a jargon-free introduction to ETFs, including the differences between them and mutual funds, how to pick among the more than 2,100 ETFs on the market, and more. Topics include: ETFs’ eroding cost advantage Potential tax advantages of ETF investing Important risks to know before purchasing ETF shares It’s never too soon to become a more informed investor. Click here to read this free, no-obligation special report today! Adviser Investments’ Market Takeaways Calm and clarity have been sorely lacking when it comes to market news recently—that’s why we’re providing Today’s Market Takeaways, short videos in which a member of our investment team analyzes what the market is telling us. Recently, Equity Research Analyst Kate Austin provided insight on Apple’s stock split and the knock-on effects for the Dow Jones Industrial Average, and Vice President Steve Johnson discussed the Federal Reserve’s updated policy framework and the potential impact on inflation going forward. About Adviser Investments Adviser Investments is a full service wealth management firm, offering investment management, financial and tax planning, managed individual bond portfolios, and 401(k) advisory services. We’ve been helping individuals, trusts, institutions and foundations since 1994, and have more than 3,500 clients across the country and over $6 billion in assets under management. Our portfolios encompass actively managed funds, ETFs, socially responsible investments and tactical asset allocation strategies, with particular expertise in Fidelity and Vanguard mutual funds. We take pride in being The Adviser You Can Talk To. Our minimum account size is $350,000. To see a full list of our awards and recognitions, click here, and for more information, please visit www.adviserinvestments.com or call 800-492-6868. Disclaimer: This material is distributed for informational purposes only. The investment ideas and opinions contained herein should not be viewed as recommendations or personal investment advice or considered an offer to buy or sell specific securities. Our statements and opinions are subject to change at any time, without notice and should be considered only as part of a diversified portfolio. Mutual funds and exchange-traded funds mentioned herein are not necessarily held in client portfolios. Data and statistics contained in this report are obtained from what we believe to be reliable sources; however, their accuracy, completeness or reliability cannot be guaranteed. You may request a free copy of the firm’s Form ADV Part 2A, which describes, among other items, risk factors, strategies, affiliations, services offered and fees charged. Past performance is not an indication of future returns. Tax, legal and insurance information contained herein is general in nature, is provided for informational purposes only, and should not be construed as legal or tax advice, or as advice on whether to buy or surrender any insurance products. Personalized tax advice and tax return preparation is available through a separate, written engagement agreement with Adviser Investments Tax Solutions. We do not provide legal advice, nor sell insurance products. Always consult a licensed attorney, tax professional, or licensed insurance professional regarding your specific legal or tax situation, or insurance needs. RIA Channel® Top 100 Wealth Managers ranks wealth managers “based on a proprietary set of criteria and data. The ranking is based on both size and growth in assets as of June 30, 2020, as reported to the SEC. RIA Database (RIADatabase.com) was used for regulatory data, organic research, and advisor surveys.” (See https://www.riachannel.com/2020-top-100-wealth-manager-list-methodology/.) Adviser Investments did not verify any data—nor were we asked to—prior to ranking or publication. Regulatory Assets Under Management (“RAUM”) displayed on RIA Channel’s website is calculated by RIA Channel, not Adviser Investments. We did not independently calculate our RAUM as of June 30, 2020, nor do we know RIA Channel’s RAUM calculation methodology. RIA Channel has not published information on how many firms were considered for ranking, nor did it publish criteria used for inclusion for consideration on this ranking. Adviser Investments did not submit any information to RIA Channel regarding in this ranking, request to be considered for the ranking or pay any fee in connection with this recognition. For more information and a complete list of recipients and rankings, visit https://www.riachannel.com/top-100-wealth-manager-list-2020/. The Boston Business Journal’s “Largest Investment Advisers in Massachusetts” ranking is based on each participating firms’ assets under management as of June 1, 2020. Only firms that choose to participate are ranked and included on the top 25 list. The award sponsor has not disclosed how many firms were survey or considered for this recognition, nor the percentage of total participants that ultimately received recognition. Award is not indicative of future investment performance nor represents client experience. For more information and a complete list of recipients, visit https://www.bizjournals.com/boston/subscriber-only/2020/07/16/largest-independent-investment-advisers.html. The Barron’s Top 100 Independent Wealth Advisors rankings consider factors such as assets under management, revenue produced for the firm, and quality of practice as determined by Barron’s editors. The award sponsor has not disclosed how many firms were surveyed or considered for this recognition, nor the percentage of total participants that ultimately received recognition. For more information and a complete list of recipients visit https://www.barrons.com/articles/are-ria-firms-growing-too-fast-the-story-behind-the-trend-51568420132. Years Received: 2019, 2018, 2017, 2016, 2015 & 2014. The Barron’s Top Advisor Rankings by State (Massachusetts) (also referred to as Barron’s Top 1,200 Financial Advisers) considers factors such as assets under management, revenue produced for the firm, regulatory record, quality of practice and philanthropic work. According to Barron’s, “around 4,000” advisory firms were considered for this recognition in 2020; with about 1,200 firms receiving recognition. For more information and a complete list of recipients visit https://www.barrons.com/report/top-financial-advisors/1000/2020?mod=article_inline. Years Received: 2020, 2019, 2018, 2017, 2016, 2015 & 2014 The Financial Times 300 Top Registered Investment Advisers is an independent listing produced annually by the Financial Times and Ignites Research. According to the Financial Times, in 2019, approximately 2000 firms were invited to be considered for its list; 740 responded with 300 being named to this list. The listing reflects each practice’s performance in six primary areas: Assets under management (70-75% of a firm’s score), asset growth (15% of a firm’s score), years in existence, compliance record, credentials and online accessibility. For more information and a complete list of recipients visit https://www.ft.com/content/44d2b2b2-6cef-11e9-9ff9-8c855179f1c4. Years Received: 2019, 2018, 2016, 2015 & 2014. Awards referenced above do not consider client experience and are not indicative of such. Nor are awards indicative of future performance. Unless otherwise noted, Adviser Investments does not pay a fee to participate in any of these awards. Additionally, awards typically only consider and recognize participants that choose to participate; and are often based on information supplied by the participants—such information should not be assumed to be verified by the sponsor of the award. The Adviser You Can Talk To Podcast is a trademark of Adviser Investments, LLC. Registration pending. © 2020 Adviser Investments, LLC. All Rights Reserved.