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16

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.

DO-IT-NOW ACTION RECOMMENDATIONS

4

Gains were hard to come by in 2015, but that doesn’t tell us anything about next year or

the long run—which is what really matters. Stick to your plan with winners like

Dividend

Growth

and

International Growth

. (See page 1)

4

Tune out those economic and market pundits. (See page 4)

4

Don’t let the fact that retirement contribution limits have stalled out discourage you from

funding your IRA. Do it now. (See page 13)

VANGUARD FOUNDER

Jack Bogle

was wrong when he said investors

should opt for indexing over active

management, but he was totally cor-

rect when he wrote on the difference

that 1% in performance can mean over

time. His words: “Seemingly small dif-

ferences in annual rates of return can

result in enormous differences in total

return over long periods of time. Do

not ignore the magic of compounding.”

And how. With December’s end

marking 25 years of performance for

my

Model Portfolios

, I think it’s fair to

say that active management has more

than kept up its end of the bargain for

both you and me.

Since inception at the end of 1990,

the three original

Model Portfolios

have

generated compounded rates of return

MODEL PORTFOLIOS

Active Wins!

ranging from 8.7% for the

Income

Model Portfolio

to 11.7% for the

Growth Model Portfolio

. By compari-

son,

500 Index

has returned 9.7% over

the period, and

Total Bond Market

Index

returned 5.9%.

The

Model Portfolios’

returns were

built on the backs of terrific active

managers, low costs, and a modicum

of trading among funds. And they kept

risk in check. Despite outperforming

the stock market by more than 2% per

annum, the

Growth Model Portfolio

was slightly less volatile than the over-

all stock market. In fact, when Jack

Bogle talked about an additional 1%

in annual gains, I doubt he considered

what would happen if an investor actu-

ally earned 2% more!

The numbers speak for themselves.

n

25 Years of

Model Portfolio

Returns

——— ANNUALIZED ——— ——— CUMULATIVE RETURNS ———

10-yr 15-yr 20-yr Inception 10-yr

15-yr

20-yr Inception

Growth

7.7% 7.0% 11.0% 11.7% 109.9% 174.7% 699.6% 1502.6%

Conservative Growth

7.3% 6.5% 9.2% 10.1% 101.8% 158.0% 484.5% 1006.4%

Income

6.4% 6.0% 7.7% 8.7% 85.7% 140.5% 337.4% 699.0%

Growth Index

7.3% 6.9% 8.7% — 101.5% 170.4% 429.4% —

500 Index

7.2% 4.9% 8.1% 9.7% 100.1% 104.4% 373.7% 912.2%

Total Bond Market Index 4.4% 4.7% 5.1% 5.9% 53.2% 99.6% 171.6% 323.1%

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

2016 Independent Guide to the

Vanguard Funds

.

This year, we have more data than ever,

including our proprietary risk and return

statistics like rolling returns and Maximum

Cumulative Loss (MCL), plus our take on

new funds Vanguard plans to launch, such

as

Core Bond, Emerging Markets Bond,

International Dividend Appreciation

Index

and

International High Dividend

Yield Index

.

Even with our huge computer files and access

to fund managers, my co-editor Jeff DeMaso

and I still find ourselves thumbing through the

annual guide to find that quick MCL statistic,

fund correlation, or even a total return figure

for 2006.

My

2016 Guide

is a great resource for

me, and for you. Call Customer Service at

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

sign up for the guide pre-publication.