(PUB) Investing 2015

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Fund Family Shareholder Association

www.adviseronline.com

Daniel P. Wiener

is America’s leading expert on

the Vanguard family of funds. He is founder of

the Fund Family Shareholder Association and

chairman and chief executive officer of Adviser

Investments, LLC, a Newton, Massachusetts,

investment advisory firm (800-492-6868). As

editor of

The Independent Adviser for Vanguard Investors

, he is

a five-time recipient of the Newsletter Publishers Foundation’s

Editorial Excellence Award. He also edits the annual

Independent Guide to the Vanguard Funds.

Mr. Wiener is often

quoted in the nation’s leading financial publications.

Jeffrey D. DeMaso,

Editor/Director of

Research, works directly with Dan Wiener

researching and writing the multiple-award

winning

Independent Adviser for Vanguard

Investors

newsletter. He also leads the analyst

team for Adviser Investments, LLC. Jeff gradu-

ated

magna cum laude

from Tufts University with a B.A. in

economics, holds the Chartered Financial Analyst designation

and is a member of the CFA Institute and the Boston Security

Analysts Society.

DAN’S DO-IT-NOW ACTION RECOMMENDATIONS

Why have my

Model Portfolios

outperformed? Chalk it up to diversified portfolios centered

around Vanguard’s best actively managed funds. (See page 1)

If you can stomach some changes in price, the new

Ultra-Short-Term Bond

may provide a

little extra yield for near-term money that you won’t need tomorrow. (See page 4)

As I’ve recommended for years, don’t give up on international stocks (see page 5). Vanguard

(page 3) and Charles Plowden, co-manager on

Global Equity

(page 4) agree.

The Ultimate

Fund Guide

WITHOUT TURNING ON A COMPUTER,

without even looking up a telephone number,

you can have at your fingertips all the data

on your favorite Vanguard funds—with the

new FFSA

2015 Independent Guide to

the Vanguard Funds

. This year, the 25th

Anniversy Edition, we have more data than

ever, plus new Vanguard funds, updated risk

analysis, top holdings, etc.

Even with our huge computer files and access

to fund managers, Research Director Jeff

DeMaso and I still find ourselves thumbing

through the annual guide to find that quick

statistic, a current redemption fee number, or

even a total return figure for 2005.

Best of all, the

2015 Guide

will be available

both in print and online, with a user-friendly

interface for easier reading, searching and

quick-reference access to the glossary, index,

and table of contents.

2015 Guide

is a great resource for

me, and for you. Call Customer Service at

800/211-7641 for all the details on how to

25th Anniversary Edition!

Vanguard’s ETF stable, and hence

gets my vote for the

Growth Index

Model

. While a higher yield often

equates to more risk in bonds, the cor-

porate sector is much healthier than it

was heading into the 2007–09 credit

crunch. And with maturities here on the

short side, we’re not exactly looking at a

fund that will get crushed in a rising-rate

environment. In fact, those higher yields

will provide a bit more cushion when

interest rates do rise.

Short-Term Investment-Grade

This remains my standby shock-

absorber fund.

Only top-tier bonds make the cut for

Short-Term Investment-Grade, so cred-

it quality is extremely high. And given

the focus on short-maturity securities,

interest-rate risk here is low.

To understand this fund and how

it compares to its Vanguard siblings,

consider its two largest drawdowns:

-2.2% in 1994 and -7.6% in 2008,

both of which are relatively minor. The

1994 experience was driven by a quick

rise in interest rates, and the fund held

up relatively well, thanks to its yield

advantage and short maturity profile.

In 2008, anything that wasn’t

Treasury-issued was shunned by the

market, and this fund suffered for it,

underperforming Vanguard’s gov-

ernment security short-term funds.

However, its resilience can be seen in

its short, six-month recovery time.

2013 was another example of

how a yield advantage helps with-

stand rising rates. While its short-

term peers struggled to generate any

return at all in 2013, and

Total Bond

Market

declined 2.3%, Short-Term

Investment-Grade was able to notch

a return of 1.0%—tops among all of

Vanguard’s actively managed invest-

ment-grade bond funds.

Should rates rise in the future—and

I do think the trend will be for higher

rates (although I’ve been early in this

warning)—this fund should continue to

serve us well.

Total International Stock ETF

Providing broad exposure to for-

eign stocks, both from developed and

emerging countries,

Total International

Stock ETF

is an index replacement for

International Growth in the

Growth Index

Model

. As I mentioned above, and have

talked about several times, don’t give up

on foreign stocks. Diversification works,

though I prefer the use of an active man-

ager for my foreign stock exposure.