As I told you last week, Vanguard is reorganizing the firm into two wholly owned units: Vanguard Capital Management (VCM) and Vanguard Portfolio Management (VPM). Now that I’ve had a little more time to digest the news, I want to follow up to answer the most common questions I’ve received, clarify a critical point and share my thoughts on this reorganization.
How Many Statements?
Many of you have asked about the practical implications. Specifically:
- Will I need separate accounts to own funds from each unit—VCM and VPM?
- Will I start receiving two statements instead of one?
Vanguard assured me that:
There will be no impact on statements, and no impact on the ability to hold or trade funds within a single brokerage account. The transition will be completely seamless from that perspective.
In short, from an investor’s perspective, this transition should be uniform. You shouldn’t notice any difference in how your funds are run or how you interact with your account and Vanguard.
Not a Silver Bullet
When I shared my first thoughts on Vanguard’s reorganization, I highlighted regulatory risk as the primary driver behind the split. After digging deeper and having further conversations, I realize that I placed a bit too much weight on that angle.
To be clear, splitting into two units doesn’t provide a magic regulatory shield—it doesn’t entirely allow Vanguard to sidestep ownership limits. It may ease some pressure, but certain regulators (like the FDIC) will still view Vanguard as one entity, regardless of how it's organized internally.
However, the reorganization is also one more attempt to address the long-running debate over how Vanguard exercises its voting power. Each advisory unit will have independent stewardship teams, each casting proxy votes separately. And yes, the units could cast conflicting votes on the same issue.
Split or not, Vanguard remains a multi-trillion-dollar powerhouse. As I said last week, regulators (and politicians) won’t be looking the other way.
That regulatory backdrop sets the stage—but the crux of the issue for investors is this: Vanguard will have two stock indexing teams, not one.
Two World-Class Teams?
As a reminder, here’s what the reorganization looks like:
- Vanguard Portfolio Management, headed by John Ameriks, will oversee actively managed funds and niche stock index funds.
- Vanguard Capital Management, led by Sara Devereux (bonds) and Rodney Comegys (stocks), will run the bond funds, broad index funds and index-based balanced funds—including the Target Retirement and LifeStrategy series.
This handy table (hat tip to Morningstar) illustrates how the funds are split across the two units.
The reorganization does not impact Vanguard’s bond funds or its actively managed stock and balanced funds. What’s new is the creation of two separate stock index teams within Vanguard. Each team will work independently, even operating out of different buildings.
On one hand, this split could be a natural evolution as Vanguard grows in size and complexity. It creates more leadership roles and career pathways. But that comes with a challenge:
Can Vanguard maintain two world-class indexing teams while keeping costs low?