Key Morningstar Metrics
- Morningstar Medalist Rating: Bronze
- Process Pillar: Above Average
- People Pillar: Average
- Parent Pillar: High
Vanguard Equity-Income has performed well under its new managers.
Performance Highlights
Subadvisor Wellington’s Matt Hand joined Vanguard Quantitative Equity Group’s Sharon Hill as a lead sleeve manager on Vanguard Equity-Income in July 2022. Since then, its investor shares have gained 10.8% through April 2025, edging out the typical large-value peer’s 10.6% return but slightly lagging the 10.9% advance of the Russell 1000 Value Index category benchmark.
The fund is doing the key job of providing solid defense during drawdowns. Specifically, so far in 2025, Vanguard Equity-Income is down just 0.2%, it is top-quartile in its category, and it is meaningfully better than the Russell 1000 Value Index’s 1.0% fall. Between the beginning of 2022 and the end of 2024 the large-value market retreated by at least 10% four times. In those instances the fund held up much better than typical large-value peers and the Russell 1000 Value Index.
Yield Is Key
Vanguard Equity-Income also provides attractive yield. Its 2.7% 12-month yield as of April 2025 ranks 18th of the 300 large-value category’s funds. And of those large-value funds with better yields, just four had higher three-year returns. It’s worth noting that the fund hasn’t even been firing on all cylinders. The Wellington sleeve predictably underperformed in the growth momentum rally of 2023 and suffered from some poor stock-picks in 2024.
The fund‘s name and its dividend benchmark promote yield as a key component of Vanguard Equity-Income’s profile. Active funds have had a hard time competing with passive vehicles, especially regarding dividend yield. Over the trailing 36 months, this fund has averaged a 2.7% 12-month yield versus the 3.0% Vanguard High Dividend ETF (which has the same benchmark), which is not bad. On a total-return basis, Vanguard Equity-Income has done better at times, including 2022 and 2023. In 2025, the two Vanguard vehicles have been in a dead heat.
Altogether, it makes for an inexpensive, well-matched mix of distinct equity-income strategies.
Vanguard Equity-Income’s subadvisors’ complementary approaches earn an Above Average Process rating, while the teams earn an Average People rating.
Management in Midst of Subadvisor Changes
Both subadvisors have gone through recent portfolio management changes fairly recently. Vanguard Quantitative Equity Group’s lead manager, Sharon Hill, took charge in October 2021 and runs one third of the assets. Matthew Hand of Wellington Management became lead in July 2022 and invests the other two thirds of the assets.
The two sleeves are a study in contrast.
Hand joined his firm and team in 2004 as an analyst, so he has more than 20 years of experience on the strategy and has maintained his predecessor’s approach. Using traditional qualitative analysis, he assembles a portfolio of 60-70 dividend-paying stocks that have solid growth prospects. He takes modest sector differences from its benchmark and also invests abroad, typically about 10% or more of assets. The strategy will considerably overweight favored stocks versus the index.
Hill joined Vanguard in August 2019 as a quantitative investing veteran after two decades at Macquarie Group. She has revamped QEG’s highly quantitative approach for this fund. It closely tracks the FTSE High Dividend Yield Index’s sector weightings, sticks to US stocks, and is only modestly overweight the top stocks.
