Products September 30, 2011

Vanguard LifeStrategy Funds to Adopt All-Index Approach

The four funds in the Vanguard LifeStrategy series, which currently feature a mix of passively and actively managed funds, will adopt an all-index approach.
Reported by

The funds will invest solely in their three broad market component funds (Vanguard Total Stock Market Index Fund, Vanguard Total International Stock Index Fund, and Vanguard Total Bond Market II Index Fund) and gradually eliminate exposure to their actively managed component funds (Vanguard Asset Allocation Fund and Vanguard Short-Term Investment-Grade Fund).  

“An all-index approach has several benefits, including lower costs and a simplified portfolio design,” said Vanguard CEO Bill McNabb. “This change will also bring a more consistent approach to Vanguard’s entire global line-up of lifecycle funds.”

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Once the transition to the lower-cost index funds is completed, the expense ratios of the LifeStrategy Funds are expected to decline two to four basis points and will range from an estimated 0.14% to 0.18%. (During the transition, which is expected to last several months, the expense ratios will remain between 0.18% and 0.20%.) The all-index composition is used by Vanguard’s LifeStrategy Funds offered in the United Kingdom and Australia, and the component funds in the LifeStrategy Funds are the same three total market index funds that comprise Vanguard’s Target Retirement Funds.

The LifeStrategy Funds will offer well-defined, static portfolios with these consistent risk profiles:

  • Growth Fund:  80% stocks/20% bonds
  • Moderate Growth Fund: 60% stocks/40% bonds
  • Conservative Growth Fund: 40% stocks/60% bonds
  • Income Fund: 20% stocks/80% bonds

Vanguard has also modified the investment strategy and policies of the $8.6 billion Vanguard Asset Allocation Fund and named new investment advisers. Vanguard’s Quantitative Equity and Fixed Income Groups have assumed investment advisory responsibilities from Mellon Capital Management Corporation and will gradually transition the fund to a static 60% stocks/40% bonds portfolio.  

Vanguard filed a preliminary proxy statement with the U.S. Securities and Exchange Commission that seeks shareholder approval to merge the Asset Allocation Fund into the $11.1 billion Vanguard Balanced Index Fund.  

Vanguard announced that the $4 billion Vanguard Growth and Income Fund has adopted a multi-manager approach, with three advisers assuming investment advisory responsibilities from Mellon Capital Management Corporation. The new advisers, each of which manage approximately one-third of the fund’s assets, are: Los Angeles Capital Management, D.E. Shaw Investment Management L.L.C., and Vanguard Quantitative Equity Group. 

Deals & People September 30, 2011

Two South Central U.S. Firms Announce Merger

Burns Advisory Group, an Oklahoma City-based wealth management firm, and Dallas-based Executive Financial Group are merging with a combined $600 million in client assets.
Reported by

The firms say clients of the combined entity will benefit from improved resources and complementary skill sets. Burns Advisory Group operates an investment committee and asset management process, while Executive Financial Group specializes in financial challenges faced by senior corporate executives and employee stock ownership plans (ESOPs).

The firms expect that their geographic proximity to one another will allow them to continue to expand in the region.   

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“Our partnership with Jerry Georgopoulos and Executive Financial Group will enable us to further differentiate our services from the competition,” says John Burns, founder of Burns Advisory Group. “Together we will build on our current offerings to reinforce the benefits of working with a team of independent unbiased professionals.”

As a condition of the merger, Georgopoulos will become a full partner in Burns Advisory Group and, likewise, Burns will acquire an equal share in Executive Financial Group. The firms will continue to function under the missions that governed their work prior to this transition, with the same professional teams remaining in their roles at their respective locations.

Burns Advisory Group, headquartered in Oklahoma City and with offices in Connecticut, is a private wealth management firm. The firm also has an established consulting practice in which it serves as a fiduciary adviser to institutional level clients and corporate and municipal retirement plans.

Executive Financial Group specializes in providing fee only, objective financial planning counsel to senior corporate executives.

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