(PUB) Investing 2016

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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.
DO-IT-NOW ACTION RECOMMENDATIONS
4 Though High-Yield Corporate and Health Care stumbled out of the gate in 2016, Jeff
and I are sticking with them for the long term. You should, too. (See pages 1 and 7)
4 Saving early for retirement isn’t a lesson most teens learn in high school. But parents and
grandparents can teach their teens a thing or two while giving them a retirement head start.
(See page 12)
4 Don Kilbride has spent 10 years on Dividend Growth proving that active management
works. There’s no reason his success can’t continue. (See page 15)
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.
believes management teams have
the will and desire to regularly raise
dividends, and where battleship balance
sheets allow them to do so. Currently
he’s focused on just 45 companies that
fit his criteria, not 500.
Vanguard offers another fund that
attempts to do about the same thing as
Dividend Growth, but in an indexed
format— Dividend Appreciation
Index. That fund, which debuted
just weeks after Kilbride took over
Dividend Growth, tracks the NASDAQ
U.S. Dividend Achievers Select index,
which is the same index against which
Kilbride is measured.
As I said, Kilbride has consistently
put that index fund to shame as the
relative performance chart on page 15
shows. The trajectory of that rising line
is testimony to Kilbride’s stock-picking
prowess. From Dividend Appreciation
Index’s inception through the end of
January, Dividend Growth has gained
a total 114.3%. The index fund gained
83.8%. (500 Index was up 80.3% over
the period.)
Don’t buy Dividend Growth for the
short term. If the markets go signifi-
cantly higher in a quick spurt, this fund
will lag. Dividend Growth is for long-
term investors.
And don’t buy Dividend Growth
for its growing dividend. The fund’s
distributed yield, on average, hasn’t
been significantly higher than the dis-
tributed yield on 500 Index. At its
best, Dividend Growth’s yield was just
0.29% better than the index fund’s, and
at times, it’s worse. In fact, at the end of
February, the fund’s 1.90% 12-month
yield was 20 basis points lower than
500 Index’s.
The reason to buy Dividend Growth
is Don Kilbride. When he or Vanguard
talks about growing dividends, what
they’re really talking about is the
resulting capital appreciation that
comes when investors bid up the price
of stocks where dividends are rising.
It’s not the dividend itself, but the
greater value that a growing dividend
implies.
The single-manager fund is becom-
ing a rarity at Vanguard, but Dividend
Growth is a great one, with a dedicated
manager whose own money is invested
alongside shareholders while pursu-
ing a disciplined investment approach.
Dividend Growth could easily serve as
your core stock holding. It’s one of my
biggest holdings personally and is a sig-
nificant holding in the Model Portfolios .
If you don’t own it, you should. n
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