(PUB) Investing 2015

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16 • Fund Family Shareholder Association
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
4 Keep an eye on the distribution calendar and don’t “buy a dividend.” Most of the Model
Portfolio funds are keeping distributions small. (See page 6)
4 U.S. Growth was reborn five years ago and is on a better path (See page 13). It’s also
officially the October Hot Hands fund, but, for my money, I’m sticking with the PRIMECAP
Management-run growth funds. (See page 1)
4 Robos are on the rise, but do you want to hand your portfolio off to a machine?
(See page 12)
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gap. (A small note on this figure:
That 21.0% gap assumes that MidCap
Growth was the October Hot Hands
fund in the period from October 2000
through October 2001, though MidCap
Growth wasn’t “adopted” by Vanguard
until mid-2002. Had the strategy been
followed using Vanguard funds in exis-
tence at the time, the loss would have
been minimal, and the October strat-
egy’s worst gap with 500 Index would
be just 13.9%, making it fourth-best
among the 12 monthly strategies. I
just don’t want to mislead anyone by
ignoring a fund that is now part of the
Vanguard fold.)
A Hot Hands strategy using the
non-sector fund with the best one-year
return at the end of November would
show a failure rate almost as low as the
October Hot Hands strategy. But on
average, the returns using a November
strategy are a bit lower versus the mar-
ket compared to those from an October
strategy. The tradeoff, though, is that
the worst gap with the market in the
November-to-November time period is
actually better than in the October one.
Yes, the October Hot Hands strategy
remains a good one, with the best suc-
cess rate of any month. Still, I prefer
the December (calendar year) strategy
since it triggers a purchase after the
year-end distribution season, an impor-
tant factor for those following Hot
Hands in a taxable account.
Please remember that a fund that
qualifies for either the October Hot
Hands strategy or the calendar-year
Hot Hands strategy may not be rated
a Buy in the Performance Review if I
feel, on a qualitative basis, that there
are better places to invest your money.
This momentum strategy is quanti-
tative, not qualitative, in nature. As
noted in the October 29 Hotline as
well as last month’s newsletter, while
U.S. Growth is officially the October
Hot Hands fund, I’m sticking with
my PRIMECAP-run funds rather than
selling and switching. I still have ques-
tions about the long-term viability of
the multimanager approach at U.S.
Growth. n
>
U.S. Growth is the
official October
Hot Hands fund,
but I’m sticking
with my
PRIMECAP-run funds.