May 06, 2025 Vanguard partners with 22 external investment advisory firms to manage the majority of our active equity funds.
Overview
Portfolio considerations
A recipe for active equity outperformance
May 06, 2025 Vanguard partners with 22 external investment advisory firms to manage the majority of our active equity funds. With a strong record of outperformance versus benchmarks over long time periods, it’s clear that Vanguard has a knack for picking talent.1 In a recent paper, Active Edge: Winning the Zero-Sum Game, we detail what we look for when selecting active equity managers. Our approach focuses on what we believe to be the key drivers of success—firm, people, philosophy, and process—and the resulting outcomes of portfolio and performance. In our view, the best active managers tend to be client-centric, think long term, and have talented teams with diverse perspectives. They also rely on deep, differentiated research and bottom-up stock picking, not static factor bets. “Our edge in active equity comes down to access to top investment talent at a low cost,” said Matthew Piro, global head of oversight and manager search at Vanguard and co-author of the paper. “Combine that with Vanguard’s long-term orientation and the deep resources we dedicate to evaluating managers—it has been a proven recipe for success.” 1 On an asset-weighted basis, our active equity funds have delivered more than 60 basis points of annualized excess return over their stated benchmarks for the 10, 15, and 20 years ended December 31, 2023. Excess return is the difference between a fund’s NAV total return and the total return of its benchmark index. Results for other time periods will vary. Past performance is no guarantee of future returns. The performance of an index is not an exact representation of any particular investment, as you cannot invest directly in an index. The performance of each U.S.-domiciled Vanguard active equity fund in the Morningstar database was compared with that of its stated benchmark using monthly return data ended December 31, 2023. The monthly returns for all Vanguard active equity funds, including those that were merged or liquidated during the period, were included in the performance calculations. The active equity portions of Vanguard balanced funds were excluded. Annualized asset-weighted excess returns were generated by calculating the asset-weighted cross-section monthly returns and then generating a time series set of returns. All fund performance data are net of fees. Sources: Vanguard and Morningstar, Inc., as of December 31, 2023. Related Links Article 7 min read A matter of style: Shifts in active fund performance Mar 13, 2025 Article 7 min read Mar 13, 2025 Article 10 min read Q's for quants: A chat with our quant equity managers Dec 03, 2024 Article 10 min read Dec 03, 2024 Notes: For more information about Vanguard funds, visit vanguard.com to obtain a prospectus or, if available, a summary prospectus. Investment objectives, risks, charges, expenses, and other important information are contained in the prospectus; read and consider it carefully before investing. All investing is subject to risk, including the possible loss of the money you invest. Contributors Matthew Piro Vanguard Information and Insights Subscribe to Vanguard. Get Vanguard news, insights, and timely analysis on the market, delivered straight to your inbox. Read our online privacy notice to learn about how we keep personal information private. You have certain cookies disabled on the Vanguard site. In order to watch videos on this site, you must agree to the use of cookies provided by YouTube. Click here to permit these cookies and watch the videos.
