U.S. stocks make up more than 50% of this global equity fund.
Vanguard Global Equity Inv (VHGEX)
From The No-Load Fund Investor
Vanguard Global Equity Inv (VHGEX), with about $5.7 billion in assets, is an actively managed fund. Year-to-date, Global Equity is up 4.5%; over the past three years, the fund has notched an annualized gain of 13.3%, good enough to qualify for second-quintile performance among all the global equity funds and ETFs we track.
Like most other actively managed stock funds at Vanguard, Global Equity uses a multimanager approach. In this case, the fund’s assets are divided among three outside firms noted for acumen in international investing: Baillie Gifford Overseas, which manages approximately 35% of assets; Marathon Asset Management, which runs 32%; and Acadian Asset Management (31%). As with its other actively managed stock funds, the powers that be at Vanguard believe spreading assets among various managers with disparate approaches but superior past performance smooths performance over time; however, doing so does not guard against market risk of the asset class.
Two of the fund’s management teams use fundamental strategies, simply meaning they use traditional security analysis to pick stocks one by one. The first, Baillie Gifford, is a relatively traditional growth manager, picking stocks that can generate above average growth in earnings and cash flows. Its managers report that recently they have reduced holdings in some top-performing U.S. stocks (e.g., Amazon and Alphabet/Google) and spread their share of assets more among heretofore less heralded companies in the U.S. and abroad.
The second, Marathon, utilizes a more contrarian approach, seeking well-managed companies on the cusp of benefiting from past capital investment. According to Marathon, its portion was recently underweight healthcare and real estate and benefited from positions in overseas cosmetic companies.
Meanwhile, Acadian uses a quantitative approach, screening 40,000 securities worldwide to arrive at attractive return forecasts based on valuations in an absolute sense, as well as relative to suitable peer groups. Its portion was recently overweight information technology and healthcare, but underweight financial services and telecommunications stocks.
Add it all together, and U.S. stocks account for a little more than half of total assets, while no other country accounts for more than 6.5% (as of July 31). In total, however, Europe gets about 18%, developed Asian markets about 12.5% and emerging markets, 13.4%.
As for sectors, financial services and information technology get slightly above 20% each, followed by consumer discretionary, at about 14%. Energy, at just 3.8% of assets as of April 30, 2018, is the most significant underweight.
The fund recently included more than 1,400 stocks, with a median market capitalization of $26.5 billion. Global Equity includes ‘value’ as well as ‘core,’ or ‘blend,’ stocks, ‘growth’ stocks represent the largest contingent: about 45%, according to Morningstar.
Mark Salzinger, The No-Load Fund Investor, 800-706-6364, www.noloadfundinvestor.com, September 2018