Changes to two actively managed Vanguard funds

July 27, 2018

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Vanguard today announced changes to Vanguard Emerging Markets Select Stock Fund and Vanguard Precious Metals and Mining Fund. These changes are a result of our ongoing oversight process and constant effort to improve investor outcomes.

Vanguard Emerging Markets Select Stock Fund

Vanguard Emerging Markets Select Stock Fund (VMMSX) will add Baillie Gifford Overseas Ltd. (Baillie Gifford) as an investment advisor. M&G Investment Management Limited will no longer advise the fund.

Baillie Gifford was founded in Edinburgh, Scotland, in 1908 and manages global equity, fixed income and multi-asset portfolios on behalf institutional and retail investors. Baillie Gifford's portion of the fund will be managed by three portfolio managers from the dedicated emerging markets team, each of whom has, on average, more than 20 years of experience in the industry and at the firm.

Baillie Gifford will join the fund's other advisors: Oaktree Capital Management, L.P., Pzena Investment Management, LLC, and Wellington Management Company LLP. Each will manage approximately 25% of the fund's assets.

The portfolio managers who will oversee the Baillie Gifford portion of Vanguard Emerging Markets Select Stock Fund are:

  • Richard Sneller, partner and head of emerging markets equities and a portfolio manager who has worked in investment management since joining Baillie Gifford in 1994. He earned an M.S. from the University of Stirling.
  • Andrew Stobart, a portfolio manager who has worked in investment management since joining Baillie Gifford in 1991. He earned an M.A. from the University of Cambridge.
  • Mike Gush, a portfolio manager who has worked in investment management since joining Baillie Gifford in 2003. He earned an M.Eng. from Durham University.

Vanguard Emerging Markets Select Stock Fund is an actively managed, all-capitalization emerging markets fund that has used a multimanager approach since its inception in 2011.

The fund's expense ratio of 0.92% is not expected to change.

Vanguard Precious Metals and Mining Fund to be restructured and renamed

As part of a restructuring intended to broaden and diversify the fund's mandate and reduce its volatility, the Vanguard Precious Metals and Mining Fund (VGPMX) will adopt a new investment strategy, change its benchmark, and be renamed Vanguard Global Capital Cycles Fund. Wellington Management Company LLP, a globally recognized investment manager with a proven track record and deep global expertise, will be the investment advisor. M&G Investment Management Limited will no longer advise the fund.

These changes are intended to allow for continued exposure to the precious metals and mining industry while reducing volatility through increased diversification. The fund will continue to provide an investment option with low correlations to other, more traditional equity strategies.

The portfolio manager for the Global Capital Cycles Fund will be Keith E. White, a senior managing director and equity portfolio manager at Wellington Management. Mr. White has extensive experience in the precious metals and mining sector. He will leverage Wellington Management's deep resources, including its 16-member natural resources, materials, and utilities team and 40 global industry analysts.

Mr. White earned a B.S. in economics from James Madison University and an M.B.A. from the Tuck School of Business at Dartmouth.

The change in the fund's investment advisory arrangements is expected to increase the fund's expense ratio from 0.36% to 0.37%.

The name, investment strategy, and benchmark changes for the fund are expected to become effective in late September 2018.

Notes:

  • For more information about Vanguard funds, visit institutional.vanguard.com or call 800-523-1036 to obtain a prospectus or, if available, a summary prospectus. Investment objectives, risks, charges, expenses, and other important information about a fund are contained in the prospectus; read and consider it carefully before investing.
  • All investing is subject to risk, including the possible loss of the money you invest.
  • Investments in stocks issued by non-U.S. companies are subject to risks including country/regional risk and currency risk. These risks are especially high in emerging markets. Prices of small- and mid-capitalization stocks often fluctuate more than those of large-company stocks. Funds that concentrate on a relatively narrow market sector face the risk of higher share-price volatility.
  • Diversification does not ensure a profit or protect against a loss.
  • All asset figures are as of May 31, 2018, unless otherwise noted.