Why We Highly Rate Vanguard International Growth

Key Morningstar Metrics for Vanguard International Growth

• Morningstar Medalist Rating: Silver
• Process Pillar: Above Average
• People Pillar: Above Average
• Parent Pillar: High

Vanguard International Growth VWIGX remains among the better options in its category, thanks to a pair of skilled subadvisors.

This fund’s manager lineup has been steady for about a decade, and that’s partly because it has delivered. Indeed, the Admiral share class landed in the top decile of peers over the trailing 10-year period ended May 2025, and though it fell to the second quartile over the trailing five-year period, it still outpaced the MSCI ACWI ex USA Growth category benchmark.

Scotland-based Baillie Gifford oversees roughly two-thirds of fund assets and is accordingly most responsible for the strong run of performance. The team’s high-growth approach produced tremendous returns during the last bull market and has reemerged after a painful stretch in 2021 and 2022 that damaged this fund’s record. Never ones to react impulsively, the Baillie Gifford team took time to assess their investment framework, and they recently confirmed that they will pay greater heed to interim volatility and have a tighter grip on risk than in the past. This could mean narrower performance swings for investors, but managers Tom Coutts and Lawrence Burns are merely modifying their aggressive growth approach rather than abandoning it. It also helps that newly installed managing partners will help shepherd the 100-plus-year-old firm into its next chapter, which should be a good one given the firm’s reach, talent retention, and culture.

London-based Schroders runs the remaining third of assets and is a great complement to Baillie Gifford. Managers Simon Webber and James Gautrey pilot a more omnivorous growth approach, willing to own stocks with various business trajectories. They apply a consistent risk framework and a more skeptical eye toward high-flying stocks trading at lofty valuations. The two benefit from a global platform of analysts, but particularly a group of about 10 sector specialists who work on research in tandem and help generate ideas. That group has seen a member or two leave for a few years in a row, which is of concern, though the managers still have adequate resources.

Overall, investors can expect a well-diversified overall portfolio of over 100 stocks that still has enough punch to stand out from the crowd and its benchmark. It’s been a good recipe for some time, and that’s likely to remain the case.

Vanguard International Growth: Performance Highlights

Vanguard International Growth boasts a compelling long-term record.

Since the current managers’ joint tenure began at the start of 2010, the Admiral shares’ 8.6% annualized gain through May 2025 easily exceeded the MSCI ACWI ex USA Growth Index’s 5.9% and the average foreign large-growth Morningstar Category peer’s 6.2%.

While the long-term track record is quite strong, the fund has had periods of weakness. It tumbled in 2021 and especially in 2022, when it finished near the bottom decile of the category with a 31% loss. Baillie Gifford’s sleeve drove tremendous returns during the previous bull market but was also most responsible for the poor 2022. But such a volatile return profile should be expected here, given that Baillie Gifford has the larger share of assets. Still, Schroders’ sleeve has offered some ballast and has held its own in both down and up markets.

The fund has long made the most of its small slice of US-domiciled holdings. Stocks such as Amazon.com AMZN and Tesla TSLA were huge contributors during the past decade. But from the start of 2023, portfolio holding Nvidia NVDA has taken the crown as it ascended to become one of the most valuable companies in the world.

Over the 12-month period ended May 2025, the fund’s consumer cyclical and communications stocks drove its modest outperformance. Overweighting such stocks as MercadoLibre MELI and Sea SE, as well as avoiding the luxury conglomerate LVMH, were among the most beneficial decisions. Conversely, industrials holdings Vestas Wind Systems VWS and Atlas Copco ATCO.A were notable laggards, though they didn’t spoil the overall return.