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Frequent Contributor

Re: VWIGX/VWILX and Baillie Gifford


@yogibearbull wrote:

I reviewed my post from 3 was ago and have nothing new to add. VWIGX/VWILX has continued to do well after I got out of it weeks ago. But I am not missing on US tech highflyers that are in my US LC-gr funds. I just didn't want them through my international fund.


@yogibearbull It's actually not easy to find foreign funds with no US exposure. Many, if not most (actively managed) foreign funds seem to hold around 10% in US stocks. Just as many US funds seem to hold around 10% in foreign stocks. It doesn't bother me, I'm not a super strict asset allocator. A part of owning mutual funds is paying for the manager's judgment, so once I've decided to own a fund, I try not to second guess the manager.

Did you maintain foreign LCG exposure elsewhere?

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Frequent Contributor

Re: VWIGX/VWILX and Baillie Gifford

@chang , sure, I have foreign LC-gr at Fido, Matthews, AF. Those funds follow more conventional management that I am more comfortable with.

YBB
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Explorer ○○

Re: VWIGX/VWILX and Baillie Gifford

chang - I'm glad you mentioned the "index-y" look of active VHGEX.  You're right...there are a lot of holdings there even after Baillie Gifford's and Marathon's dumping of a bunch of deep value stocks from Acadian's slice of the fund, following Acadian's termination as a third co-manager in late 2018.

I have a similar view these days of quant VSEQX in the mid/small (MSCI 2200) universe, although VSEQX has never claimed to be much more than "index-y " (maybe "index-y plus").  VSEQX had 379 stocks as of 6/30/2020, only five of which have a portfolio weight of 1% or more (1.3% max).  I've held both VHGEX and VSEQX for 10-15 years now.   

Truth be told, I've never been an "index-y" kind of guy.  As I transition, somewhat glacially, from accumulation to consolidation/de-risking, I think I've become even less "index-y".  As I age, and in these times of reduced expectations, qualities such as lower volatility and active conviction suddenly seem much more attractive. Accumulation-phase excitement ("the thrill of the chase") doesn't turn me on as much as it used to.  My three Primecap funds (VPCCX, POGRX, POAGX) and DODBX may end up to be the riskiest elements in my portfolio by this time next year, while I hang onto VWENX, VWIAX, and DODIX on the conservative end.

You know, I might be persuaded to add either of the Global W's based just on Wellington Mgmt.'s bona fides and your and yogi's respective imprimaturs.  But, I continue to cogitate over possible duplication/over-representation when combined with the domestic W's holdings and over the desirability, if any, of adding more non-U.S. equity and non-U.S. fixed income to that already present in the other funds.  This is all in an attempt to assemble a high-quality, lowered-risk, sequence-of-returns-oriented, retirement portfolio with a 5-6% annual return.

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Explorer ○○

Re: VWIGX/VWILX and Baillie Gifford

The latest information on Baillie Gifford and Vanguard comes from Dan Weiner's August 27, 2020 FFSA Vanguard Hotline:

"...In Vanguard news, while I thought that Vanguard had figured out that fewer was better—as in fewer managers on a fund leading to better performance—they reversed course and gave a 10% slug of International Explorer (VINEX) to a team from Baillie Gifford this week, making it the fourth management team on the tiny fund.

Obviously, Baillie Gifford is the favored son right now, having more investment “mandates” from Vanguard than any outside manager except Wellington Management. The Edinburgh-based firm manages portions of U.S. Growth (VWUSX), Global Equity (VHGEX), International Growth (VWIGX) and Emerging Markets Select Stock (VMMSX). They also have a portion of the International Variable Annuity portfolio, giving them a total of about $45 billion in Vanguard investor assets under management.

                                                            Many Mandates and $45 Billion in Assets

Fund                                                   Size (billions)        Baillie Gifford share        Assets Managed (billions)

International Growth                                 $51.4                             66%                                     $34.0

U.S. Growth                                                 35.8                             15                                            5.4

Global Equity                                                 6.8                              50                                           3.4

Int'l Variable Annuity                                    4.5                              60                                            2.7

International Explorer                                   2.4                              10                                            0.2

Emerging Markets Select Stock                   0.7                              25                                            0.2   

                                                                                                                                                     $45.3

Of course, the PRIMECAP team manages much more money than that, at more than $90 billion when you include the three funds and variable annuity under its umbrella.

Is this a good thing? Well, it might improve things at International Explorer from time to time, but overall adding yet a fourth management team to this international small-cap fund is just not a smart move. Vanguard has trimmed its over-diversified teams at funds like Explorer (VEXPX), Windsor II (VWNFX) and Global Equity, for example. But it’s larding up International Explorer, having added Times Square Capital Management in 2017 (they manage 20% of the fund’s assets) and now Baillie Gifford as well.

Schroder is the loser here in that their allocation is being trimmed from 50% to 40% while Wellington remains with 30% of assets in its care. If I had to guess, Vanguard could be building towards reducing headcount at the fund over the next year or two as Baillie Gifford gets its bearings."

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Frequent Contributor

Re: VWIGX/VWILX and Baillie Gifford

Yep, I don't understand why Vanguard puts 3, 4 or 5 subadvisors on some funds. VINEX in particular is a 1* fund, so I would have thought that Vanguard should be firing one or more subadvisors, not hiring more.

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Frequent Contributor

Re: VWIGX/VWILX and Baillie Gifford

With TSLA split out of the way and Elon Musk issuing more TSLA stock [after issuing some in Feb], Baillie Gifford is also reducing TSLA exposure a bit.   https://www.cnbc.com/2020/09/02/teslas-largest-outside-shareholder-reduces-holding-citing-portfolio-...

YBB
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