The final few months of 2013 have been rough ones for Vanguard fund manager continuity. Today’s announcement that Vanguard Explorer Fund’s (VEXPX) Jack Granahan, one of the longest-tenured Vanguard fund managers, will be giving up portfolio responsibilities at year-end was just the latest news of manager loss out of Valley Forge.
An interesting side note, while Vanguard now says that Granahan Investment Management colleagues Jane White and Gary Hatton have been co-managers on the fund since 2000 and 1998 respectively, neither was actually listed or disclosed as a portfolio manager until sometime in 2011. While I have little doubt that both were intimately involved in portfolio management duties at Explorer and in other Granahan-run portfolios, it’s funny how history gets rewritten despite more than a decade of inadequate disclosures.
Vanguard Precious Metals & Mining Fund’s (VGPMX) Graham French stepped down in November, handing off the fund to Randeep Sommel, who’d only just been named co-manager in January.
Vanguard International Growth Fund’s (VWIGX) Virginie Maisonneuve, ex-manager at Schroder’s, went on “garden leave” from her firm at the end of October upon announcing she’d be decamping for a role as PIMCO’s Global Health of Equities Portfolio Management. Vanguard never mentioned the departure. Her name was simply excised from fund materials.
PRIMECAP Management’s Mitch Milias also announced he’d be withdrawing from active management at Vanguard PRIMECAP Fund (VPMCX) and Vanguard PRIMECAP Core Fund (VPCCX). (Fund co-manager and PRIMECAP co-founder Howard Schow passed away in 2013 as well.)
Bob Auwaerter gave notice last month that he’d be leaving his duties as head of Vanguard’s fixed income department at the end of March 2014.
And lest we forget, Sandip Bhagat, the head of Vanguard’s Quantitative Equity Group, who joined the firm in 2009, left unceremoniously at the end of 2012, though the announcement was held until January of this year. Plus, Vanguard Health Care Fund’s (VGHCX) Ed Owens turned over his fund to co-manager Jean Hynes at year-end 2012.
What’s going on? Is Vanguard in revolt? I don’t believe so. Let’s call this evolution, rather than revolution.
That said, the guessing game now shifts to other Vanguard managers including Vanguard Windsor II Fund’s (VWNFX) Jim Barrow who seemed poised to pull back from duties there and at Vanguard Selected Value Fund (VASVX), but has stayed on as his new co-managers, Jeff Fahrenbruch and David Ganucheau at Windsor II, have gotten their feet wet.
Of course, Vanguard has worked to downplay the impact of manager moves with its multi-manager strategy at funds like Explorer, Vanguard Morgan Growth Fund (VMRGX), International Growth, Windsor II and the like. Ever since the days of star manager John Neff, whose Vanguard Windsor Fund (VWNDX) soared and swooned, Vanguard has tried to make it seem as though the impact of one individual manager just doesn’t make a difference—and on its multi-managed funds I’d say they have probably gotten it right as the soup can only get so muddled as you throw more cooks into the kitchen.
I’ve got my eye on these changes but the most important ones will be those of individual managers with great track records running funds solo, or nearly solo. I would be particularly unhappy, for instance, to see Don Kilbride leave Vanguard Dividend Growth Fund (VDIGX), or for that matter, to see the fund become multi-managed. Mark Giambrone, who is Barrow’s co-manager on Selected Value and will no doubt take over the fund upon Barrow’s retirement is also someone I’d hate to see leave.
So the question remains: Who’s next?
Senior Editor Dan Wiener and Editor/Research Director Jeffrey DeMaso publish The Independent Adviser for Vanguard Investors, a monthly newsletter that keeps abreast of recent developments at Vanguard, and the annual FFSA Independent Guide to the Vanguard Funds.