Outflows: VWELX, VWINX, VDIGX, VPMAX

Comments

• InformalEconomist

  8:50AM

  Thanks for posting this and checking into past five years.
  Russel Kinnel, author of the article, speculates:

  I think the driver of flows in this case is the long-running move to target-date funds in 401(k)s.

  He also notes VDIGX's lower exposure to Mag 7 tech funds.
  I would add, VWELX and VWINX are among Vanguard's oldest funds, and RMDs could have something to do with outflows
• Derf

  8:51AM

  If one is thinking of unloading one of the mentioned funds, then also read the link YBB provided.
• yogibearbull

  9:09AM edited 9:12AM

  Good points by @InformalEconomist and @Derf.
  
  But I think that there are other issues too.
  
  Looking at other allocation funds with MFOP, ABALX / BALFX is doing OK in AUM, but VBINX, FBALX, FPURX are showing similar outflow patterns. An explanation may be that ABALX / BALFX has both advisory and DIY channels, and handholding or marketing by advisory channels may be at work. Other funds are mostly DIY and those investors can be impatient, and sometimes act against their own best interests, as Morningstar Mind-the-Gap studies show.
  
  BTW, I am a holder of VWELX and VPMAX (along with other PRIMECAP-managed VG funds). I got rid of VWINX years ago.
  
  One practical implication of heavy outflows is that yearend CG distributions may be high - but mine are in the IRAs. So, the OP wasn't intended to motivate holders to just sell, but to evaluate.
  
• racqueteer

  9:33AM

  It may also be the recognition that traditional bonds were not behaving well, and this was often what one found in allocation funds. I think many, like me, chose to separate their bond and equity components and work with them separately to get better performance from their portfolios.
• a2z

  11:10AM

  
  some arrogance involved.
  primecap and wellington had many years to ask vanguard to adopt an etf structure for tax\trading benefits.
  the fee declines seem too little, too late for typical active retail buyers.
• WABAC

  1:35PM

  I closed all the Vanguard positions in my IRA when I left Vanguard and moved to Fidelity. They included three of the four funds mentioned. I was too late for the Primecap party.
• BaluBalu

  3:39PM edited 3:40PM

  I think arrogance describes well. I still hold a couple of their ETFs (in taxable) because of cap gain hand cuffs.
• sfnative

  3:52PM

  After tax returns for the Primecap-managed Vanguard funds have been exceptionally disappointing for well over a decade due in part to heavy redemptions.
• BenWP

  4:11PM

  FWIIW, I sharply reduced my Vanguard TGFs, (VTHRX, VTTHX), in my TIAA retirement account in favor of tweaking the allocations myself. @racqueteer mentions doing the same thing, above. The VG TDFs' foreign allocations have been a brake, as have the FI portions.
• msf

  4:44PM

  Vanguard has never created an ETF share class of an existing actively managed fund. Until a few years ago that would have created disclosure problems (publishing portfolios daily) for the existing funds. Even now, it might find it difficult to shoehorn the newer ETF rules into its patent for ETF/OEF share classes. (Don't know, haven't checked.)
  
  Nor is Vanguard likely to ever clone an OEF into an ETF. That could immediately trigger an outflow from the OEF into the cheaper ETF, at least in tax-sheltered accounts. Vanguard was burned by doing something similar not too long ago - opening a cheaper clone of a TDF to lots of investors by lowering the min for the clone. The resulting shifting of assets by investors created a hefty cap gains tax liability for those investors remaining in the more expensive fund.
  
  The third alternative would be to convert the OEFs into ETFs. If that were such an obvious move, then one would expect most fund companies to have already done this. While some have, the number seems to be more like a trickle than a flood.
  
  IMHO RK is understating VDIGX's performance issues. I agree that when one invests in a particular style of fund and that style by design underperforms, that's not cause for concern.
  
  However ... a quick M* screen of large cap blend funds with "Dividend" in their name (e.g. Rising Dividends, Dividend Growth, etc.) turns up 60 share classes. VDIGX is 60th of 60 for 3 year returns. 97th percentile in 2023, 98th percentile in 2024, and 89th percentile YTD.
  
  OTOH, with Primecap, ISTM that its moderate underperformance (55th percentile over 3 years, 63rd percentile over 5 years) may indeed be attributed to its long term style - investing more in large caps and less in mega caps, and investing 10-20% internationally. If one is looking for a pure US large/mega fund, this isn't it and never has been.
  
  Finally, there's a difference between moving away from Vanguard's platform and Vanguard's funds. It may be possible to negotiate a waiver of transaction fees for Vanguard funds on another platform. I was able to do that with Schwab when I brought my (somewhat sizeable) Vanguard holdings there. Though it is very difficult to buy additional Admiral shares of actively managed Vanguard funds on non-Vanguard platforms.
  
• mskursh

  4:52PM

  Their platform stinks IMO so when people move and can't buy them without fees at other places, they get redeemed and moved into other options.
  
  I also think there is something to be said about the "great wealth transfer" beginning. these are long time popular products amongst the greatest gen/boomers and there is a huge attitude shift in active management among genx/mill/z.