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A PUBLICATION OF FUND FAMILY SHAREHOLDER ASSOCIATION • VOL. 26, NO. 7
U.K. to E.U.: Pee-Yew!
“The pessimist sees difficulty in every opportunity.
The optimist sees opportunity in every difficulty.”
—Winston Churchill
INVEST FOR TOMORROW,
invest for the next year, or invest for the next decade? I think
a lot of investors were pondering those questions during the final week of June as stock
markets first crumbled under the weight of the result of the Brexit vote on June 23 and
then staged rebounds. Ultimately, as negative as the initial reporting was, by the end of
June, London’s FTSE 100 index was up 4.4% for the month and actually 2.6% higher
than where it stood prior to the Brexit vote.
Jeff talks quite a lot about the foreign markets in the first of our two-part focus on
Vanguard’s global offerings, beginning just below, but suffice to say that the result of
the Brexit vote was that one very specific unknown has been replaced by a host of
unknowns. And while the former had an end date of June 23, the latter are going to be
spread across the next couple of years at a minimum, which will certainly keep investors
on their toes and markets volatile.
Competing with the Brexit story and its global implications for stocks was what
might be an even larger story around the bond market. Specifically, the continuing
low, low level of interest rates. The yield on the 10-year Treasury bond fell to 1.49%
at month’s end from an already low 1.83% at the end of May, and was not far from the
1.42% low the day after the U.K. vote. Bonds may have value as a comfort when you
are anxious about markets, but at today’s rates, their long-term financial payoff is low,
The Independent Adviser for Vanguard Investors
and FFSA are completely independent of The Vanguard Group, Inc.
OVERSEAS
Keep Calm and Carry On
THE UNITED KINGDOM’S JUNE 23 DECISION
to leave the European Union—the
Brexit—sent shockwaves through financial markets around the globe. The U.K.’s bench-
mark FTSE index fell 5.6%, and the British pound fell 11.1% against the dollar over two
days, while Europe’s STOXX 600 dropped 10.9% over the same period. In the U.S., the
S&P 500 index fell a relatively lighter 5.3%.
The declines had many investors questioning whether they should even bother investing
overseas at all. Dan and I sympathize with their anxiety on this issue, but I am going to
make the case that investing as least a portion of your money outside of the U.S. is smart
portfolio management. Depending on what lens you peer through, the Brexit is a great
example of why investors should diversify their holdings beyond their home country.
DOW JONES INDUSTRIALS
June Close:
17929.99
STANDARD & POOR’S 500
June Close:
2098.86
4300
4550
4800
5050
5300
JMAMF JDN OSA J
NASDAQ COMPOSITE
June Close:
4842.67
0.00%
0.08%
0.16%
0.24%
0.32%
JMAMF JDN OSA J
3-MO.TREASURY BILLYIELD
June Close:
0.25%
1.4%
1.6%
1.8%
2.0%
2.2%
2.4%
JMAMF JDN OSA J
10-YR.TREASURY NOTE YIELD
June Close:
1.49%
15900
16400
16900
17400
17900
18400
JMAMF JDN OSA J
1850
1900
1950
2000
2050
2100
2150
JMAMF JDN OSA J
AVERAGEVANGUARD INVESTOR*
June:
0.6%
YTD:
3.3%
-6.0%
-4.0%
-2.0%
0.0%
2.0%
4.0%
6.0%
JMAMF JDNOSAJ J
*See the footnotes on page 2.
Keep Calm and Carry On.................................................. 1
June Special Distributions. ............................................... 3
Model Portfolios................................................................ 2
Nibbling at Their Cooking.................................................. 3
Steady As She Goes on Partnership Dividends................ 7
Performance Review.................................................... 8-11
Another Team Bites the Dust.......................................... 15
Dan’s Do-It-Now Action Recommendations.................... 16
JULY 2016
SEE
U.K.
PAGE 3
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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
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SEE
OVERSEAS
PAGE 12