March 3 Vanguard Group Inc said on Monday it
dropped Armstrong Shaw Associates as an adviser to its Windsor
II fund and shifted assets to another firm of the well known
With $45.7 billion in assets at the end of January, Windsor
II is one of the larger actively managed equity funds at
Vanguard, best known for its index vehicles.
A Vanguard spokesman, David Hoffman, said fund trustees made
the change based on factors like performance results and
investment process. An Armstrong Shaw principal, Monica Grady,
declined to comment.
Windsor II gained 30.7 percent last year, beating only 25
percent of peer large-cap value funds, but it has done
relatively better in prior years, according to data from Lipper,
a Thomson Reuters unit.
Armstrong Shaw, based in New Canaan, Connecticut, had
managed about 4 percent of the fund's assets, Vanguard said, or
about $1.8 billion. That money will now be managed by Hotchkis &
Wiley Capital Management of Los Angeles, Vanguard said, bringing
its total percentage of fund assets to 11 percent, or $5
Armstrong Shaw managed $3.1 billion at the end of 2013,
according to a securities filing.
Daniel Wiener, who edits a newsletter for Vanguard
investors, called the move "a baby step in the right direction"
for Windsor II and said in a research note that "Vanguard should
take more steps to trim cooks from its multi-managed funds'
kitchens" to improve their performance.
In a follow-up email, Wiener said he does not expect
Vanguard to do so. Vanguard has 17 funds using a multi-manager
approach; the next largest after Windsor II is the $21.6 billion
Vanguard International Growth Fund, Hoffman said.
Hoffman said no similar manager changes are planned. The
multi-manager approach, he said, "enables the individual
managers to focus on longer-term performance and opportunities
where they have the most conviction. They can be less concerned
with short-term results."