A PUBLICATION OF FUND FAMILY SHAREHOLDER ASSOCIATION • VOL. 24, NO. 7
Summertime—Is the Livin’ Easy?
IT’S BEEN ONE HECK OF AYEAR SO FAR.
Summer’s here, and we have yet to see a
pullback in the stock market beyond about a 5.7% decline for
500 Index
. Smaller stocks
have been even more placid, with
SmallCap Index
suffering a 5.2% drop at worst and
MidCap Index
down just 4.9%. But those losses didn’t stick, either for the index funds
or their active counterparts. At the end of June, most of Vanguard’s equity funds were
at or within fractions of their all-time highs. And while the number means nothing on
its face, the fact that
Health Care
, up 14.5% this year, now sells for more than $200
per share, and several other funds’ prices are over $100, signals that the long-term bull
market continues to move ahead. (Don’t forget that these prices, and those of most of
Vanguard’s funds, would be even higher if you accounted for all of the distributions
taken out over the years.)
Don’t get me wrong—the bull hasn’t exactly been charging forward. While the Dow
has hit almost a dozen all-time highs so far in 2014, and the S&P 500 even more, the fact
is that these gains have come in small increments, in light trading free of much volatility
and an environment where many investors remain fearful of the equity markets.
So, yes, the livin’ has been very easy—easier than I expected when the year turned.
But if there’s a bull that should have expired but hasn’t given up yet, it’s in the bond
market, where investors continue to add money despite some of the lowest yields in more
than 30 years. At year-end, 10-year Treasurys were yielding more than 3.0%. They’re
now closer to 2.5%, and
Extended Duration Treasury ETF
, the longest-duration
Vanguard income fund by far, is up a whopping 19.9% for 2014 after a 19.8% loss last
The Independent Adviser for Vanguard Investors and FFSA are completely independent of The Vanguard Group, Inc.
MULTIMANAGERS
Explorer Charts New Territory
VANGUARD HAS TAKEN ITS MULTIMANAGER STRATEGY
to a whole new level at
Explorer
. On June 16, Explorer gained its eighth fund management team. Arrowpoint
Partners, a boutique asset manager in Denver, was assigned a 4% portion of Explorer’s
$12.4 billion portfolio as money was shifted away from other managers. The fund now
has a total of 17 different portfolio managers all contributing to its growing pot of stocks.
In its announcement, Vanguard says the addition of the new management team—two
veterans from Janus—is “not expected to substantially change the fund’s character,”
which is too bad. Explorer could do with some change, having become index-like or
worse in its performance.
When Vanguard introduced Arrowpoint, it also tried to paint Explorer’s performance
in a good light by comparing it to its Lipper peer group as well as its benchmark
DOW JONES INDUSTRIALS
June Close:
16826.60
STANDARD & POOR’S 500
June Close:
1960.23
3500
3750
4000
4250
4500
JMAM F JD NOS AJ
NASDAQ COMPOSITE
June Close:
4408.18
0.00%
0.02%
0.04%
0.06%
0.08%
JMAM F JD NOS AJ
3-MO.TREASURY BILLYIELD
June Close:
0.02%
2.0%
2.3%
2.6%
2.9%
3.2%
JMAM F JDNOS AJ
10-YR.TREASURY NOTE YIELD
June Close:
2.52%
14000
14900
15800
16700
17600
JMAM F JD NOS AJ
1600
1700
1800
1900
2000
JMAM F JD NOS AJ
AVERAGEVANGUARD INVESTOR*
June:
1.7%
YTD:
6.0%
-3.0%
-2.0%
-1.0%
0.0%
1.0%
2.0%
3.0%
4.0%
JMAMF JDNOSAJ
*See the footnotes on page 2.
Model Portfolios................................................................ 2
Interview: Gregory Davis.................................................. 4
A No-Calorie Spread.......................................................... 7
Performance Review.................................................... 8-11
Learning FromYear One.................................................. 12
Yields in Context............................................................. 13
Dogs and Cats Living Together....................................... 14
Partnership Plan Steady.................................................. 15
PIN
7638*
*SEE PAGE 16
JULY 2014
SEE
SUMMERTIME
PAGE 3
>
S P E C I A L E X P A N D E D 1 6 - P A G E I S S U E
>
SEE
EXPLORER
PAGE 4
