The Vanguard Group said on Monday that its Quantitative Equity Group will manage a portion of the $6.1 billion Vanguard Energy Fund, which has been managed exclusively by parent company Wellington Management since its inception in 1984.
Vanguard, the nation's second-largest mutual fund complex, will provide fund management services to the fund on an at-cost basis. The estimated expense ratio of the fund's share classes - 0.33% for Investor shares, 0.27% for Admiral shares - is not expected to change materially with the addition of the new manager, company officials said.
Under the reorganization, Vanguard will emphasize those stocks that the advisor believes will add value while maintaining a risk profile consistent with a broadly diversified, global energy-stock portfolio. However, Wellington will continue to serve as lead adviser of the fund, the company said.
The Valley Forge, Pa.,-based company's quantitative equity group picks stocks based on relative return potential using variables such as attractive valuation and improving fundamentals relative to its peers. Vanguard now employs a multi-manager approach for 15 of its 31 actively managed stock mutual funds and annuity portfolios.
To minimize the tax impact of assets to the new advisor, the quantitative equity group will be allotted a modest amount of the fund's current stake in short-term reserves. Then, over time, Vanguard will manage an increasingly larger portion of the fund's assets.
In addition to adding an advisor, Vanguard is reopening the fund to new investors, effective June 7. A $25,000 minimum initial investment is required for new fund investors in both regular and IRA accounts, the company said.