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A PUBLICATION OF FUND FAMILY SHAREHOLDER ASSOCIATION • VOL. 26, NO. 8
No Dividend Growth
WITH JUST TWO DAYS LEFT
in the month, Vanguard slammed the doors shut on
Dividend Growth
, a fund that you and I have owned since December 2007, when I
recommended putting it into all three of the original
Model Portfolios
. The decision
to give Don Kilbride some of our money (and more, as we added to it down the road)
was a good one, as he earned us a 97.5% return from the time we bought in through the
day Vanguard closed the fund. That was 8.5% better than its index cousin,
Dividend
Appreciation Index
(which I now recommend as an alternative), and 11.9% better than
the return from
500 Index
.
I’m disappointed that new investors won’t have access to Don’s excellence, but I’m
also glad that Vanguard didn’t assign additional managers to sop up the recent flood
of cash pouring in. I’m hopeful this is yet another sign, along with the firing of sev-
eral managers from multimanaged funds over the past few months (see page 4), that
Vanguard has finally lost some of its infatuation with the multimanager strategy that has
crippled funds like
Explorer
,
Morgan Growth
and
Windsor II
, to name a few.
Despite a coup in Turkey, terror attacks overseas and at home, and two contentious
political conventions, July was a stellar month for U.S. stocks, as the Dow, S&P 500,
S&P MidCap 400 and S&P SmallCap 600 indexes all hit record highs. As the month
closed, these various indices had generated returns of 2.8% to 5.0% and were at or less
than 1% below their records. Almost two dozen of Vanguard’s equity funds hit record
highs during July and almost a dozen, including
Growth Index
and
PRIMECAP
, stood
at highs as the month ended.
The Independent Adviser for Vanguard Investors
and FFSA are completely independent of The Vanguard Group, Inc.
FUNDS FOCUS
> FOREIGN/GLOBAL
Casting a Wary Eye Overseas
HOW QUICKLY THINGS CAN CHANGE
in just 31 days. When Dan and I wrote to you
last month, traders and investors were grappling with the implications of the Brexit vote,
and markets were on a stomach-churning rollercoaster ride.
In the past month, I can’t say we have gained all that much clarity on the long-run
implications of the pending U.K. exit from the E.U., but as the world didn’t immediately
fall apart following the vote, markets around the globe found stable ground:
Total Stock
Market
gained 4.0% in July, while
European Index
returned 3.8%,
Pacific Index
gained 5.4% and
Emerging Markets Stock Index
advanced 4.7%.
Still, many investors remain concerned about their foreign stock holdings. I understand
their reservations; although, as I wrote last month, I believe that holding some overseas
DOW JONES INDUSTRIALS
July Close:
18432.24
STANDARD & POOR’S 500
July Close:
2173.60
4300
4550
4800
5050
5300
J JMAMF JDN OSA
NASDAQ COMPOSITE
July Close:
5162.13
0.00%
0.08%
0.16%
0.24%
0.32%
J JMAMF JDN OSA
3-MO.TREASURY BILLYIELD
July Close:
0.24%
1.2%
1.4%
1.6%
1.8%
2.0%
2.2%
2.4%
J JMAMF JDN OSA
10-YR.TREASURY NOTE YIELD
July Close:
1.46%
15700
16300
16900
17500
18100
18700
J JMAMF JDN OSA
1820
1900
1980
2060
2140
2220
J JMAMF JDN OSA
AVERAGEVANGUARD INVESTOR*
July:
2.9%
YTD:
6.4%
-6.0%
-4.0%
-2.0%
0.0%
2.0%
4.0%
6.0%
J JMAMF JDNOSAJ
*See the footnotes on page 2.
Funds Focus: Foreign/Global............................................. 1
Model Portfolios................................................................ 2
Maybe Two Heads Aren’t Better Than One....................... 4
Are Stocks More Volatile?................................................. 5
Distorting MidCap Growth’s Gains.................................... 6
Recessions and Bonds—Bears Have It Wrong................. 6
Performance Review.................................................... 8-11
Dan’s Do-It-Now Action Recommendations.................... 16
AUGUST 2016
SEE
DIVIDEND
PAGE 3
>
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
>
SEE
FOCUS
PAGE 12