(PUB) Investing 2016

15

September 2016

Morningstar FundInvestor

net inflow of $10 . 3 billion, followed by AQR with $10 billion, and Metropolitan West with $6 . 6 billion in inflows. Vanguard’s top-selling funds are Vanguard Total Stock Market Index VTSAX ( $22 billion for the year to date), Vanguard Total International Stock Index VTIAX ( $21 billion), Vanguard Total Bond Market Index VBTLX ( $10 billion), and Vanguard 500 VFIAX ( $7 billion). The five firms with the most outflows are Franklin Templeton (negative $24 . 5 billion for the year to date), Fidelity (negative $10 . 9 billion), Ivy (negative $10 . 1 billion), PIMCO (negative $9 . 2 billion), and GMO (nega- tive $8 . 9 billion). Franklin’s most-redeemed funds are Templeton Global Bond TPINX (negative $8 . 7 billion for the year to date), Franklin Income FKINX (negative $3 . 7 billion), and Franklin Mutual Global Discovery TEDIX (negative $2 . 8 billion). Assessing Vanguard International Growth’s New Look Vanguard International Growth ’s VWIGX road may be a little rockier at times, but its long-term prospects remain bright. Thus, the fund retains its Morningstar Analyst Rating of Silver. There’s been another manager change here, although its impact will be on the margin. Vanguard removed subadvisor M & G and portfolio manager Charles Anniss from the fund on July 15 , 2016 . At the time, M & G managed 11 . 5% of the portfolio. M & G’s assets were re- allocated among the two remaining subadvisors, Baillie Gifford and Schroders. The two subadvisors now manage 60% and 40% of fund assets, respectively. Vanguard doesn’t give reasons for subadvisor changes, but M & G’s removal may have owed to frequent personnel changes at the firm. Anniss became sole man- ager of the fund’s M & G sleeve in October 2014 , replacing Greg Aldridge. Given that M & G only managed 11 . 5% of assets, its departure shouldn’t have a huge impact on the fund. Plus, those assets went to existing, rather than new, subadvisors. That said, M & G was the most valuation-conscious of the three subadvisors, so without it, the fund may become even more growth-

oriented. (As a result, the MSCI ACWI ex USA Growth Index may be the better benchmark going forward.) Based on Vanguard data, the July 2016 portfolio showed higher average price multiples than in the month prior. Before the manager change, the portfo- lio’s average price multiples were a bit below the foreign large-growth Morningstar Category averages. This could make the fund more volatile than in the past, too, although historically it has tended to tread water during downturns. However, it fared worse than most foreign large-growth peers in the 2015 – 16 bear market because of its overweighting in emerging markets, as growth stocks held up better. The fund fell 24 . 9% peak to trough (May 22 , 2015 , to Feb. 11 , 2016 ) versus a 20 . 7% decline for the MSCI ACWI ex USA Growth. But the fund’s excellent long-term record makes it easier to ride out such bouts of volatility. With experienced managers James Anderson and Simon Webber in charge, the fund’s strong foundation remains in place. Aston Funds Getting Renamed As of Oct. 1 , 2016 , the Aston funds will be changing their names, one more step in the integration of the family into the Affiliated Managers Group lineup of funds. The six funds subadvised by River Road will change to names beginning with “ AMG River Road,” so that Aston/River Road Dividend All Cap Value ARIDX , with a Morningstar Analyst Rating of Bronze, will become AMG River Road Dividend All Cap Value. Aston Small Cap ATASX will change its name to AMG GW& K U.S. Small Cap Growth, reflecting the offi- cial transition to new subadvisor GW& K. The other funds will change to names beginning with “ AMG Man- agers,” so that Silver-rated Aston/Fairpointe Mid Cap CHTTX will become AMG Managers Fairpointe Mid Cap and Bronze-rated Aston/Montag & Caldwell Growth MCGFX will become AMG Managers Montag & Caldwell Growth. All of the funds’ ticker symbols will remain the same, as will their strategies. K