Vanguard Windsor™ Fund

Scorecard
4 / 5 Stars
Lipper
4 5 3 5 4
Zacks Investment Research
5 (Strong Sell)
Standard & Poor's
5 / 5 Stars
TheStreet.com
B+ (Buy)

#50 in Large Value

U.S. News evaluated 326 Large Value Funds. Our list highlights the top-rated funds for long-term investors based on the ratings of leading fund industry researchers.

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Performance

The fund has returned 29.11 percent over the past year, 14.78 percent over the past three years, 25.10 percent over the past five years, and 6.87 percent over the past decade.

Trailing Returns Updated 02.28.2014
Year to date 2.2%
1 Year 29.1%
3 Years (Annualized) 14.8%
5 Years (Annualized) 25.1%
10 Years (Annualized) 6.9%

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Summary

The managers at Vanguard Windsor like their stocks cheap. As value investors, they focus on picking undervalued companies they believe have potential to grow.

As of March 05, 2014, the fund has assets totaling $17.28 billion. Its portfolio consists largely of investments in large-cap stocks, mostly in the United States, and the managers can invest up to 30 percent in companies outside the U.S.

With holdings like American International Group, Fannie Mae, and Freddie Mac, the fund suffered during the downturn. Still, management sees untapped value in financials, which as of the end of September 2010 made up the fund’s largest sector holding. In an annual report, management says, “A roller-coaster ride isn’t unusual for Windsor because of its focus on out-of-favor companies that the fund’s advisors believe have unrecognized merit.” Meanwhile, in 2010 the fund has struggled to find its footing. The fund has returned 29.11 percent over the past year and 14.78 percent over the past three years.

The fund’s management looks for stocks that are out of favor. In a semi-annual report, management notes, “Value stocks have strongly outperformed coming out of past bear markets, often for extended periods.” The fund normally maintains fairly diversified holdings, with the two largest sector holdings being in financial and consumer companies. The fund has returned 25.10 percent over the past five years and 6.87 percent over the past decade.

Investment Strategy

The fund’s prospectus says the managers invest in undervalued stocks that are generally “out of favor” or are “trading at prices that are well below average in relation to such measures as earnings and book value.”

Role in Portfolio

Morningstar assigns the fund a “core” role.

Management

The fund is run by three comanagers from two subadvisers. James Mordy of Wellington Management manages about 65 percent of the fund’s assets, and Joseph G. Paul and Greg Powell, both of AllianceBernstein—which took partial control of the fund’s assets in 1999—oversee the rest of the fund. Mordy replaced David Fassnacht in June 2008. Mordy has been with Wellington Management since the fund’s inception.

Fees

Vanguard Windsor™ Fund has an expense ratio of 0.37 percent.

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Risk

Primary risks include the fund’s tendency to favor cheap and sometimes volatile picks, as well as recent management changes in both the Wellington Management and AllianceBernstein portions of the portfolio.

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Fund Opinions

The fund's Value Line Overall Rank, a measure of risk-adjusted performance and relative growth in fund returns, is 2 on a scale of 1 to 5, with 1 being the best and 5 the worst.

Value Line 2014-03-12

The fund's Value Line Growth Persistence rank, which awards funds that consistently outperform their broad universes, is 2 for one year, 2 for five years, and 3 for 10 years. Scores are on a 1 to 5 scale, with 1 being the best and 5 the worst.

Value Line 2014-03-12

The fund's Value Line Risk Rank, a measure of volatility, is 3 on a scale of 1 to 5, with 1 being the least volatile and 5 the most.

Value Line 2014-03-12

In the March 2010 edition of The Independent Adviser for Vanguard Investors, Dan Wiener says, "Over the long haul, returns have, quite simply, not been worth the volatile ride. That's because Windsor's strategy of buying companies on the ultra-cheap can lead to prolonged underperformance."

2010-06-02

In the annual Lipper/Barron’s Fund Families Survey for 2009, Vanguard ranks 40th out of 61 fund families surveyed.

Lipper

In the annual Lipper/Barron’s Fund Families Survey for 2009, Vanguard ranks 40th out of 61 fund families surveyed.

Lipper