Vanguard is farming out some of the $5.4 billion in assets in its International Growth Fund to a Scottish investment firm. The Valley Forge, Pennsylvania-based firm added the second manager to its oldest and largest international fund to set the stage for further asset growth, according to company officials.

Edinburgh-headquartered Baillie Gifford Overseas will manage between 20 and 25 percent of the fund (some $1 to $1.35 billion) through the deal. It will also receive a similar slice of the $210 million International Portfolio of the Vanguard Variable Insurance Fund. The mandate will represent up to 3 percent of Baillie's $30 billion of assets under management. Until now, London-based Schroder Investment Management North America held the entire mandate. It will continue to manage 75 to 80 percent of the portfolio.

John J. Brennan, Vanguard's chairman, said in a statement that the fund's shareholders will be better served by a multi-manager structure. Any long-term growth in assets is more easily absorbed by with duel managers, Vanguard officials believe.

Brennan added that that the fund's investment objective and policies will not change and that shareholders are being informed of the change through a mailing.

Vanguard now uses a multi-manager approach on five of its 23 actively managed stock funds: Explorer, Windsor, Windsor II, Morgan Growth, and Equity Income.  

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