Vanguard ousts AllianceBernstein as subadviser of U.S. Growth

The Vanguard Group Inc. has fired AllianceBernstein Holding LP as a subadviser of its U.S. Growth Fund Ticker:(VWUSX), ending a nine-year relationship. The fund company has tapped Delaware Investments and Wellington Management Company LLP to replace Alliance. Wellington already manages 17 portfolios for Vanguard, while the relationship with Delaware is new. Delaware and Wellington join William Blair & Co. LLC, and each firm will manage one-third of the $3.7 billion fund independently, said Dan Newhall, a principal in Vanguard’s portfolio review department. “After nine years with AllianceBernstein, where we made two or three changes in that time with AllianceBernstein to try to improve performance for shareholders, we ultimately were not satisfied with the results and felt that shareholders would be better served by making this change,” he said. AllianceBernstein will continue as a subadviser on Vanguard’s Global Equity Fund:Ticker:(VHGEX), International Value Fund Ticker:(VTRIX) and Windsor Fund Ticker:(VMNDX). “We remain deeply committed to our valued relationship with Vanguard,” said John Meyers, a spokesman at AllianceBernstein. “We continue to provide several investment services to the firm and will work to further enhance our partnership with them.” The U.S. Growth Fund has underperformed its category for the past one-, three-, five-, 10- and 15-year periods, according to Morningstar Inc. “This has obviously been a fund that has long disappointed Vanguard, and they have been trying for a long time to right the ship. So I can’t say that this is really unexpected,” said Morningstar research director Russel Kinnel. This isn’t the first time that Vanguard has changed the management of the fund, and it remains to be seen if this latest shake-up will improve performance, he said. Vanguard tapped AllianceBernstein to replace Lincoln Capital Management in 2001. In 2004, the firm hired William Blair to manage some of the assets managed by Alliance, Mr. Newhall said. There were also a few management changes at Alliance. In September 2009, Vanguard replaced AllianceBernstein manager Alan Levi with another internal large-cap-growth team. And AllianceBernstein manager Jim Reilly left the firm in June. “This fund has undergone more management changes than most of Vanguard’s actively managed subadvised funds,” Mr. Kinnel said.