IndexFunds.com Staff

Two New Actively Managed Funds Join Vanguard Lineup; Precious Metals Fund Shuttered

The Vanguard Group today announced that two new funds will begin trading on Wednesday - Vanguard Mid-Cap Growth (VMGRX) and Vanguard International Explorer (VINEX).

In March, the Valley Forge-based fund shop said it planned to merge Provident Investment Counsel Mid Cap fund (PIMAX) into Vanguard Mid-Cap Growth, and Schroder International Smaller Companies fund into Vanguard International Explorer. Shareholders approved the mergers in mid-June.

The new Vanguard International Explorer fund has an expense ratio of 0.75%, which halves the previous expense ratio of the Schroder International fund. The estimated expense ratio for the new Vanguard mid-cap fund is 0.65%. The new offerings shore up Vanguard's lineup of active funds with two new asset classes. However, mid-cap growth companies have taken it on the chin as of late, with the Russell Midcap Growth index down 19.70% since the beginning of the year. The S&P 500 lost 13.16% over the same time period.

Aside from lower expenses, shareholders in the merged funds should expect little to change.

"The new funds will continue to follow the objectives and investment strategies of their predecessors," said Vanguard in a statement.

Vanguard, the leader in low-cost retail index funds, now offers 23 actively managed funds in the U.S., excluding variable annuities.

Last week, Vanguard closed its Precious Metals fund due to large inflows as investors continued to chase the latest hot asset class.

"The fund's strong performance against the backdrop of weak stock market returns has attracted substantial cash inflows, which has raised our concerns about investor time horizons and expectations," said Vanguard Chairman John J. Brennan. "We are implementing this fund closure to protect the interests of the fund's long-term shareholders."