(PUB) Investing 2016

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6 • Fund Family Shareholder Association
across the markets. Energy fell
21.5% in 2015, and Energy ETF
tumbled 23.2%. Over the past three
years, cumulative returns are -20.5%
and -13.0%, respectively, which is at
least one reason there’s so much talk
of a big rebound. And it could come,
given that oversupply has been ratch-
eted down substantially. But be very
careful—many of those who are beating
the (oil) drum for energy are the same
people who were also energy bulls a
year ago. As the old saying goes, even a
stopped clock is right twice a day.
Eventually, the energy believers will
be able to say, “I told you so.” But that
doesn’t mean you and I need to make
a bet on the sector. I’d rather leave the
LOOKING BACK
2015 Year in Review
THE MARKETS WERE VOLATILE, and yet they ended 2015 with little to
show for it. Meantime there were plenty of goings-on around the globe
and in Vanguard’s offices, and there was plenty to show for that. Here’s
a bit of a rundown on how the year proceeded.
JANUARY: Vanguard registers to offer Tax-Exempt Bond
Index, its first muni-bond index fund and ETF, almost five years to the
day after originally filing to offer three muni index funds…A terrorist
attack on satirical magazine Charlie Hebdo’s Paris editorial offices sets
off global condemnation…Oil’s price drops below $50 per barrel…The
Swiss National Bank removes its cap on the euro/Swiss-franc currency
relationship, and the franc soars while the Swiss market tumbles…The
European Central Bank (ECB) announces a bond purchasing program to
jumpstart stagnant euro-zone economies and fend off deflation. The plan
is to buy 60 billion euros ($69 billion) worth of bonds a month starting
in March through at least September 2016…Vanguard opens Explorer
Value and Emerging Markets Select Stock to all investors…Greek
anti-austerity party Syriza takes power, leading investors to question
whether Greece will continue to pay its debts…TOP FUND: Extended
Duration Treasury ETF, 14.2%. WORST: Financials ETF, -5.5%.
FEBRUARY: Ultra-Short-Term Bond opens its doors and begins
investing shareholder money after a 10-day subscription period…Jobs
numbers continue to point to a U.S. economy in expansion…Greece
reaches a temporary four-month plan with other euro-zone countries that
buys everyone time to work out a long-term Greek financing deal…The
FTSE 100 (essentially the U.K.’s S&P 500 index) reaches a new high for
the first time since 12/30/1999…Vanguard files for an Institutional
Target Retirement series of funds and an Alternative Strategies fund
that is primarily intended for use by Managed Payout…For the Target
Retirement and STAR Lifestrategy funds, Vanguard boosts the foreign
stock exposure to 40% of equity assets and increases the foreign bond
allocation to 30% of bond assets…Without notice from Vanguard, Ed
Antoian of Chartwell drops off of both Explorer and MidCap Growth .
He leaves his co-manager, John Heffern, to handle Chartwell’s portion
of each fund solo…NOAA data shows February 2015 to be the coldest
February since 1979…TOP FUND: Information Technology ETF, 8.3%.
WORST: Extended Duration Treasury ETF , -9.1%.
MARCH: The NASDAQ crosses 5000 for the first time since
March 2000—though it doesn’t yet reach a new high mark…Vanguard
announces that a number of index funds will move from annual to
quarterly dividend distributions starting in the third quarter…Apple
replaces AT&T in the Dow Jones Industrial Average…The ECB starts
its 19-month-long, 1-trillion-euro bond buying (quantitative easing)
program…Vanguard revamps its “personal investor” website…Heinz,
owned by Berkshire Hathaway and 3G Capital (a Brazilian private equity
group), announces a merger with Kraft Foods to create one of the largest
food and beverage companies in the world…TOP FUND: Health Care,
2.5%. WORST: Precious Metals & Mining, -9.1%.
APRIL: Former Federal Reserve Chairman Ben Bernanke announces
he will become a senior adviser to both Chicago hedge fund Citadel and
bond shop PIMCO rather than return to academia or take a position at a
bank…After 15 long years, the NASDAQ surpasses the high set during
the tech market’s March 2000 bubble peak. In the same week, Japan’s
Nikkei index also hits a 15-year high as it crosses 20000…Vanguard
delays the launch of its Tax-Exempt Bond Index fund and ETF until
May…TOP FUND: Energy, 10.4%. WORST: REIT Index, -5.9%.
MAY: Vanguard enters the robo-adviser space by broadening the
availability of Personal Advisor Services with a lowered investment
minimum of $50,000…Federal Reserve Chair Janet Yellen describes
stock valuations as “quite high”…“Sell in May” takes a backseat to
new records for the Dow, the S&P 500 and the NASDAQ…Vanguard
postpones the launch of Tax-Exempt Bond Index yet again…Six of
the largest banks pay $5.8 billion in fines as five of them plead guilty to
currency-rigging…Vanguard also enters the “liquid alternatives” fund
space, an area it has often critiqued as inappropriate for most individu-
als, with the launch of Alternative Strategies…The U.S. removes
Cuba from its “state sponsors of terror” list…TOP FUND: Health Care
ETF, 5.3%. WORST: Energy, -6.3%.
JUNE: The Greek debt drama dominates headlines throughout June as
Greece defers a payment to the IMF; summits are held, and ultimately no
deal is reached. At the end of June, Greece closes its banks and stock mar-
ket, and the country becomes the first to default on an IMF loan…Prime
Money Market’s yield moves above 0.01% for the first time in nearly
two years…Vanguard announces changes to benchmark indexes for four
international stock index funds: Developed Markets Index, European
Index, Pacific Index and Emerging Markets Stock Index. The moves
add small-caps to all portfolios, Canadian stocks to Developed Markets
Index and Chinese A-Share stocks to Emerging Markets Stock Index…In
response to new money market regulations, Vanguard reopens Federal
Money Market and announces that Admiral Treasury Money Market
will lose its Admiral status, while the Institutional shares of Prime Money
Market will become Admiral shares…Tragedy strikes at Emanuel African
Methodist Episcopal Church in Charleston in a mass shooting…Once
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