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Qn re: Portfolio of Vanguard Global Minimum Volatility Fund - VMVFX

ibartman
edited January 2015 in Fund Discussions
Below is the market cap breakdown, per M*, of the Vanguard Global Minimum Volatility Fund, VMVFX.

When the fund was announced, I think that I expected to see it filled with solid staid large cap value/blend holdings, similar to the equity sleeves of VG Wellington or Wellesley funds.

That's not what is there. Check out link, below.

In terms of capitalization at least, it is much more diverse, and less market hugging than I initially expected.

Do folks out there find the makeup of the portfolio surprising, and/or do they have any comments regarding the composition of the fund, etc?

Aside: What other fund looks like this?

Also: Check out specific holdings: http://portfolios.morningstar.com/fund/holdings?t=VMVFX

Thanks.
=================================================================

VMVFX Market Capitalization

Size..........% Fund............Bmark.......Category Avg
Giant........25.03..............51.47..........57.18
Large........20.04..............34.86..........18.49
Medium....36.73..............13.56..........18.14
Small........14.74............... 0.11.......... 5.26
Micro........ 3.45................ 0.01.......... 0.93

US Stock: 45%
Non US Stock: 55%
Avg Mkt Cap: $8.9B
-----------------------------------------
BMark: MSCI ACWI
Category: World Stock/Large Blend
M* LINK: http://portfolios.morningstar.com/fund/summary?t=VMVFX

Comments

  • JohnChisum
    It seems to be mostly a value fund. The name Minimum Volatility sounds better. It will be interesting to see how this fund performs in the long run.
  • mrdarceymrdarcey
    Outside of their quant model, looks like they hedge dollar exposure in order to further reduce volatity. That would explain why its returns are beating other global value funds like DODWX and PGVFX over the last few months.

    That would make it most similar to TWEBX in market cap, being currency hedged, and holding lower volatility names.
  • msf
    That's an interesting comparison. I like it. Tweedy, Browne does come to mind as offering hedged funds, value oriented. One difference is that TB is overpriced, while Vanguard might even be called "underpriced". And the VG fund is more of a midcap.

    What came to my mind was MQIFX. Also from a value-oriented shop that tends to hedge currency. A bit lower market cap (closer to VMVFX), a lot cheaper, and closer to VMVFX in turnover (i.e. higher than TWEBX, not a good thing, but perhaps a closer match).

    I can't speak to the volatility of its individual holdings, but as a whole, MQIFX' portfolio has pretty low volatility. Aside from the numbers, M* writes that it "employ[s] Mutual Series' house style, which is designed to preserve capital and minimize volatility."

    I ran an intersection between MQIFX and VMVFX - the only overlap was tobacco, both Altria and BAT. Wonder what to make of that. In contrast, the only overlap between TWEBX and VMVFX are BAT and J&J. Perhaps a tad more "healthy".

    All three funds tracked together for the first half of 2014, and the two comps tracked lower together in the 2nd half, while Vanguard continued to rise.

  • mrdarceymrdarcey
    Good call. I remembered Tweedy's portfolios as having slightly lower market caps than they do now. Looks like TWEBX is up over $70B.
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