The Vanguard Group announced today that it has hired Alliance Capital Management of New York to replace Lincoln Capital Management of Chicago as the new sub-advisor to its $12.4 billion Vanguard U.S. Growth Fund effective today.

Lincoln Capital had served as the fund’s sub-advisor since 1987, according to Vanguard. Alliance will also manage the $700 million Vanguard Variable Insurance Fund - Growth Portfolio.

A Vanguard spokesman declined to specify exactly why Lincoln was being replaced, except to note that the Vanguard board of directors had made the decision.

Under Lincoln’s management, the fund had been plagued with negative performance numbers. The Vanguard U.S. Growth Fund has lost 24.3 % so far this year, after losing more than 20 % during all of 2000, according to Morningstar.

This is the first Vanguard fund that Alliance will manage. However, Sanford C. Bernstein of New York, which Alliance purchased last year for $3.5 billion, manages a portion of the assets of the $18 billion Vanguard Windsor Fund, according to a Vanguard spokesman.

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