MutualFundWire.com: Sanders Capital Grabs its First Vanguard Sub-Advisory Spot

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Wednesday, January 13, 2010

Sanders Capital Grabs its First Vanguard Sub-Advisory Spot

On Wednesday Sanders Capital secured a sub-advisory victory. Vanguard revealed that the New York City-based firm will join the roster of sub-advisors for the Windsor II Fund (VWNFX) –- the Valley Forge, Pennsylvania-based investment manager's largest actively managed equity fund.

Sanders will oversee approximately 8.5 percent of the fund's assets, which totaled $35 billion as of December 31, 2009. Sanders is set to join a lineup of five other sub-advisors, which as of October 31, 2009 included: Barrow Hanley, overseeing 69% of the fund; Lazard Asset Management with 18 percent; Hotchkis & Wiley at 5 percent; Armstrong Shaw Associates with 4 percent; and the Vanguard Quantitative Equity Group, handling 2 percent. Barrow Hanley has worked with the fund since 1985, Vanguard Quantitative Equity Group since 1991, Hotchkis and Wiley since 2003, Armstrong Shaw since 2006, and Lazard Asset Management since 2007.

In an emailed statement to The MFWire, Vanguard spokeswoman Amy Chain confirmed that "Sander's portion of the fund was re-allocated from another of the other advisors," though Chain declined to name which advisor lost out.

The move is a big win for Sanders. Chain clarified that "this is the first and only fund that Sanders Capital manages for Vanguard."

At the helm will be Sanders Capital's CEO and co-CIO, Lewis A. Sanders, and John P. Mahedy, co-CIO and research director, who will share portfolio management duties for the firm's portion of the large-cap value fund. According to a company press release, the portion of the fund they will co-manage is slated to include 35 to 45 stocks with a low portfolio turnover rate between 30 and 40 percent annually.

“Vanguard seeks skilled, experienced managers who bring an investment approach and process that adds value to our funds,” stated Bill McNabb, CEO and chairman of Vanguard. “We view Sanders Capital as a natural fit, and are pleased to partner with such tenured and talented investment professionals.”

The Vanguard Windsor II Fund, which invests predominantly in large-and mid-cap companies whose stocks are deemed undervalued, was first launched in 1985.

Company Press Release

VALLEY FORGE, PA, January 13, 2010— Sanders Capital, LLC, has been added to the investment advisory team of Vanguard’s largest actively managed equity fund, the $35 billion Vanguard Windsor™ II Fund (VWNFX).

Two investment management industry veterans, Lewis A. Sanders, CEO and co-CIO of Sanders Capital, and John P. Mahedy, co-CIO and research director, serve as portfolio managers for the firm’s portion of the large-cap value fund. Sanders Capital has been allocated about 8.5% of the fund’s assets.

“Vanguard seeks skilled, experienced managers who bring an investment approach and process that adds value to our funds,” said Vanguard Chairman and CEO Bill McNabb. “We view Sanders Capital as a natural fit, and are pleased to partner with such tenured and talented investment professionals.”

Sanders Capital employs a traditional, bottom-up, fundamental research approach to identifying securities that are undervalued relative to their expected total return. The firm’s portion of the fund is expected to include 35 to 45 stocks, with a low portfolio turnover rate of between 30% and 40% per year.

"We, at Sanders Capital, consider it a privilege to partner with Vanguard, one of the finest investment organizations in the industry," said Mr. Sanders.

Mr. Sanders formerly was the chairman and CEO of AllianceBernstein, L.P. and before that of Sanford C. Bernstein & Co., Inc. He formed Sanders Capital in 2009. The firm joins five other advisors in the management of the Windsor II Fund: Barrow, Hanley, Mewhinney & Strauss, Inc. (which has managed the fund since 1985); Vanguard Quantitative Equity Group (1991); Hotchkis and Wiley Capital Management, LLC (2003); Armstrong Shaw Associates Inc., (2006); and Lazard Asset Management LLC (2007).