More Vanguard Manager Changes to Mull Over
Should you be concerned about these six changes to Vanguard actively managed funds?
Vanguard has continued its surprising pace of manager changes since I last did a roundup in March. There have been a total of six departures, additions, or replacements at Vanguard funds in the last four months, bringing the total number of changes this year to about 15. Here's my read on the latest batch.
The Windsor Coup
I've already written about Vanguard's decision to replace manager Dave Fassnacht of Wellington Management at Vanguard Windsor (VWNDX) and Vanguard Capital Value (VCVLX). You can read my initial take here and in the What We're Hearing section of this month's Vanguard Fund Family Report. The short story is the funds have had their troubles recently, but I was surprised Vanguard pulled the plug on Fassnacht when his counterpunching style was out of favor. His replacement at Windsor, Wellington's James Mordy, is unlikely to invest much differently because he has been a member of the same team as Fassnacht for 25 years.
Capital Value's new manager, Wellington's Peter Higgins, however, practices a much different brand of investing. Judging from his previous management stints at Dreyfus, Higgins is value-oriented and contrarian, but he also trades a lot. Higgins had a great track record at Dreyfus Premier Midcap Value (DMCVX) before joining Wellington Management in 2005. High-turnover managers, however, bear a heavier burden of proof. It's hard overcome the transaction and tax costs that trading generates, and it's difficult to consistently make that many right trading decisions over the long term. As an admirer of Windsor and an owner of Capital Value, I'm disappointed.
Dan Culloton does not own (actual or beneficial) shares in any of the securities mentioned above. Find out about Morningstar’s editorial policies.