Vanguard on Wednesday announced the retirement of its longest-tenured external portfolio manager, Edward Owens, the brains behind Vanguard Health Care (MUTF:VGHCX).
Owens, who has helmed VGHCX since its 1984 inception, will step down Dec. 31, 2012. He has helped grow Vanguard Health Care into the largest fund in the global health/biotech category with $22.4 billion in assets, and the second-largest sector fund in the mutual fund industry behind the $27.3 billion Vanguard REIT Index Fund (MUTF:VGSIX).
With Owens’ departure, Vanguard loses more than two decades of strong performance. VGHCX has returned 16.36% annually since inception, beating both the S&P 500’s 10.7% returns and the Lipper Global Health/Biotech Funds Average of 13.42%. More recently, VGHCX’s five-year returns of 4.77% have outstripped a flat market and a 3% category average.
Stepping in for Owens will be Jean Hynes, senior vice president and partner at Wellington Management. Hynes has served on the Vanguard Health Care management team for almost 20 years, and specializes in pharmaceuticals and biotechs.
Daniel Wiener, editor of The Independent Adviser for Vanguard Investors, had this to say about whether Hynes’ ascension is reason to bail:
“Hardly. In fact, under co-manager Jean Hynes, who’ll take over the fund when Owens leaves, performance and risk management should remain steady. Whether she can goose Health Care to compete with the much smaller and more nimble Hartford Healthcare (MUTF:HGHAX), run by the same Wellington team that supports Owens, remains to be seen. I wouldn’t expect a $22 billion fund to be as easy to manage as the $420 million Hartford fund, but Hynes is certainly up to the task.”
Vanguard Health Care Investor Shares is a no-load fund that currently charges 0.35% in expenses and requires a minimum investment of $3,000, and also yields 1.5%.
VGHCX is most heavily weighted in pharmaceuticals (~65%), with significant holdings in health care equipment (~10%) and biotech (~9%). Top holdings include Merck & Co. (NYSE:MRK), UnitedHealth Group (NYSE:UNH), Forest Laboratories (NYSE:FRX), Pfizer (NYSE:PFE) and McKesson (NYSE:MCK).
Kyle Woodley is the Assistant Editor of InvestorPlace.com. As of this writing, he did not hold a position in any of the aforementioned securities. Follow him on Twitter at @KyleWoodley.
