For Vanguard Selected Value, Two Heads Function As One

This Kiplinger 25 fund is managed by two separate companies with different bargain-hunting strategies.

Two firms that prowl for cheap stocks run Vanguard Selected Value (symbol VASVX). Barrow, Hanley, Mewhinney & Strauss manages 75% of the fund, and Donald Smith & Co. controls the rest. Both seek high-quality, midsize companies that trade at bargain prices.

The unconventional setup has worked over time -- the fund’s 3.5% five-year annualized return tops the typical midsize-company value fund by an average of 1.3 percentage points per year (all returns are through September 17). Over the past 12 months, the fund’s 19.1% gain lagged other midsize value funds by all of 0.4-point, but it trailed its bogey, the Russell 2000 Value index, by 5.9 points. The story behind that? Well, there are two, of course -- one from Barrow, Hanley and one from Donald Smith.

Subscribe to Kiplinger’s Personal Finance

Be a smarter, better informed investor.

Save up to 74%

Sign up for Kiplinger’s Free E-Newsletters

Profit and prosper with the best of expert advice on investing, taxes, retirement, personal finance and more - straight to your e-mail.

Profit and prosper with the best of expert advice - straight to your e-mail.

Sign up

To continue reading this article
please register for free

This is different from signing in to your print subscription

Why am I seeing this? Find out more here

Nellie S. Huang
Senior Associate Editor, Kiplinger's Personal Finance

Nellie joined Kiplinger in August 2011 after a seven-year stint in Hong Kong. There, she worked for the Wall Street Journal Asia, where as lifestyle editor, she launched and edited Scene Asia, an online guide to food, wine, entertainment and the arts in Asia. Prior to that, she was an editor at Weekend Journal, the Friday lifestyle section of the Wall Street Journal Asia. Kiplinger isn't Nellie's first foray into personal finance: She has also worked at SmartMoney (rising from fact-checker to senior writer), and she was a senior editor at Money.