Axa Rosenberg, one of Vanguard's mutual fund sub-advisors, is seeing changes in its top ranks in the wake of a coding error. The Wall Street Journal picked up on the changes in the Thursday edition of the Fund Track column.

Barr Rosenberg, a co-founder of the company, left the board, Thomas Mead left his post as research director and global chief investment officer Agustin Sevilla transitioned to a senior research role. The firm also tapped Kathleen Houssels to the newly created role of head of investment models.

Axa Rosenberg runs parts of Vanguard Explorer Fund, Vanguard Market Neutral Fund and Vanguard U.S. Value Fund.

"We will certainly take this new information and the firm's actions under consideration as we continue to evaluate our relationship with Axa," a Vanguard spokeswoman told the pub.

In April, Axa Rosenberg sent a letter to clients in which it discussed a coding error that it had first discovered in June 2009 and corrected between September and mid-November.

The mistake "affected the scaling inputs from our risk model into our portfolio optimizer," company officials stated in the letter.

Shortly after, Vanguard said it was reviewing its relationship with Axa Rosenberg.

In May, Schwab announced it will pull the plug on four Laudus Funds sub-advised by Axa Rosenberg in mid-July. Schwab adopted Axa Rosenberg's mutual fund family in 2004 and retained the latter as sub-advisor.

Then, in early June, Axa Investment Managers will acquire the remaining 25 percent of Axa Rosenberg that it doesn't already own. Rosenberg and Kenneth Reid, Axa Rosenberg's co-founders, hold that stake. 

Edited by: Armie Margaret Lee


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