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The Independent Adviser for Vanguard Investors
•
January 2016
•
7
FOR CUSTOMER SERVICE, PLEASE CALL
800-211-7641
investing to brilliant managers like Don
Kilbride at
Dividend Growth
, who,
despite a large overweight to the energy
sector, was able to generate a total
return of 2.7% in 2015, outpacing the
market and his index fund competitor,
Dividend Appreciation Index
, which
lost 2.0%. For that matter, the team
at PRIMECAP Management has done
well with long-term bets on the oil sec-
tor over the years.
You’re also going to be hearing
again, Vanguard files with the SEC for exemptive relief to offer ETF shares
of its actively managed funds…The Supreme Court legalizes same-sex
marriage across the country and again upholds provisions in Obamacare…
TOP FUND:
S&P SmallCap 600 Growth ETF
, 1.5%. WORST:
Precious
Metals & Mining
, -8.7%.
JULY:
Greece votes overwhelmingly against IMF proposals and
austerity, pushing the country one step closer to leaving the euro…
The NYSE halts trading for nearly four hours due to a computer glitch…
China’s government, in an effort to stem panic selling, bans major stock-
holders from selling shares for six months…Greece receives its third
bailout in five years, though the terms are even more stringent than
the ones it voted against…Jobless claims hit their lowest level since
1973…Chinese stocks decline 8.5% in a single day, the biggest daily
decline since 2007…TOP FUND:
Extended Duration Treasury ETF
,
7.0%. WORST:
Precious Metals & Mining
, -16.2%.
AUGUST:
A Puerto Rican agency defaults on bonds for the first
time, paying just $628,000 on $58 million that was due…IMF delays
giving the Chinese yuan reserve currency status for at least a year, silenc-
ing shrill warnings of a looming dollar collapse…After multiple delays,
Vanguard finally launches
Tax-Exempt Bond Index
…China devalues
its currency, the yuan, by 4% or so versus the dollar, sending ripples
across global markets…A Vanguard insider calls out the mutual fund
giant in a whistleblower tip for lax cybersecurity practices…Vanguard
launches
Alternative Strategies
fund, but unless you are an institu-
tional client of Vanguard, the only way to access the new fund will be
through
Managed Payout
…On Aug. 24, the Dow opens a whopping
1,000 points below its prior close, but recoups half those loses by the
end of the day. The S&P 500 index falls into correction territory (down
10% or more from the prior high) for the first time in about four years…
Second-quarter GDP’s growth rate is revised up to 3.7% from 2.3%…
Federal Money Market
joins
Prime Money Market
in yielding more
than 0.01%…TOP FUND:
Ohio Long-Term Tax-Exempt
, 0.5%. WORST:
Emerging Markets Select Stock
, -9.5%.
SEPTEMBER:
Oil falls below $40 a barrel for the first time
since 2009…Vanguard changes its frequent trading policy to 30 days
from 60 days, making it easier for shareholders to book tax losses…
In a much-hyped meeting, the Fed leaves interest rates unchanged…
Presidential hopeful Hillary Clinton tweets about a plan to regulate drug
pricing, sparking a sell-off in biotech stocks…Vanguard files with the
SEC to launch two new foreign index funds,
International Dividend
Appreciation Index
and
International High Dividend Yield
Index
…A prominent tax attorney says Vanguard could be liable for
$34.6 billion in back taxes and penalties if a whistleblower’s accusations
prove valid…Corporate raider Carl Icahn releases a video warning of an
approaching crisis, but provides little in the way of solutions…At the
eleventh hour, Congress passes a stopgap spending bill to keep the gov-
ernment open until December 11…TOP FUND:
Market Neutral
, 5.0%.
WORST:
Materials ETF
, -7.8%.
OCTOBER:
Vanguard announces Jim Barrow will retire from his
duties at
Windsor II
and
Diversified Value Annuity
at the end of the
year…
European Index
and
Pacific Index
transition to the new index-
es that were announced in June, adding small-cap stocks to their port-
folios…China abandons its one-child policy in the face of demographic
imperatives…In a first, the U.S. Treasury sells $21 billion of 3-month
bills at a 0.0% yield to overwhelming demand…Money market yields
continue rising slightly, with
Prime Money Market
up to 0.08%…The
Fed gives its clearest signal yet that a rate hike is coming in December…
Vanguard puts the
Health Care
team on a performance incentive plan,
the first ever for the fund’s managers…TOP FUND:
Materials ETF
,
12.9%. WORST:
Intermediate-Term Government Bond ETF
, -0.6%.
NOVEMBER:
Emerging Markets Stock Index
begins its transi-
tion to the all-inclusive FTSE Emerging Markets All Cap China A Inclusion
index…Jack Bogle tells the
Philadelphia Inquirer
that his market predic-
tions in the press are simply “casual” comments and that only his aca-
demic papers’ predictions should be considered serious…Chinese con-
sumers spend over $14 billion through Alibaba (the e-commerce giant) on
“Singles Day”…Tragedy hits Paris on Friday, Nov. 13, as terrorists strike
multiple targets in a coordinated attack, killing more than 120 people and
wounding hundreds more. ISIS claims responsibility for the massacres…
The IMF approves letting the Chinese yuan join the dollar, yen, euro
and pound as a reserve currency. The change will take effect in 2016…
Marriott buys Starwood in a $12 billion deal to create the largest hotelier
in the world, and Pfizer, in an inversion that will make it an Irish company,
inks a $160 billion merger deal with Allergan…Turkey downs a Russian
fighter jet near the Syrian border…
Energy
’s Karl Bandtel and
Long-
Term Investment-Grade
’s Lucius Hill both announce they will retire in
June 2016……TOP FUND:
Russell 2000 Growth ETF
, 3.7%. WORST:
Precious Metals & Mining
, -9.6%.
DECEMBER:
Vanguard delays the launch of two new foreign
stock index funds,
International Dividend Appreciation Index
and
International High Dividend Yield Index
, until 2016…Less than a week
after a shooting in Colorado, two shooters kill 14 people in San Bernardino,
California…Two new active funds,
Core Bond
and
Emerging Markets
Bond
, are proposed for 2016 release, though the EM fund may be kept
from the public for a bit…The Fed ends its ZIRP (zero interest rate policy)
with a 0.25% increase in the fed funds rate, seven years to the day after
it last cut rates…Donald Trump and Ted Cruz lead the GOP field as we
head into an embattled primary season…Investors suffer glitches as they
combine brokerage and fund accounts at Vanguard’s request…TOP FUND:
Consumer Staples ETF
, 2.2%. WORST:
Energy ETF
, -11.1%.
more and more about gold, since its
proponents believe not only that the
shiny metal protects against inflation
(it doesn’t) and is a store of value (it
>
SEE
OUTLOOK
PAGE 12