(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 Stay focused and don’t get seduced by Precious Metals & Mining’s near-record returns
this year. (See page 5)
4 Know thyself. Mutual funds are for investors, while ETFs are for traders. Don’t be fooled
into thinking new means better. (See page 6)
4 Prepare for a rocky month. After the summer calm, it’s September, not October, that could
rock investors’ worlds. (See page 7)
Analyze This
When I started this newsletter in 1991, I had
to thumb through paper SEC filings and copy
fund data by hand. But now, thanks to advances
in technology and the efforts of our team at
InvestorPlace, Jeff and I are able to bring you
an unprecedented research tool for Vanguard
investors: The Independent Vanguard Fund
Analyzer.
The Fund Analyzer takes everything you know
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book to a whole new level. Like our guidebook,
it contains comprehensive data on every
Vanguard fund we track. And like our newsletter,
it’s updated every month. (Some data is even
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But unlike either, it gives you direct access to a
suite of online, interactive charts, tables, and other
analytical tools created directly from our in-house
database—and it’s designed to work with any
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And the best part is, you can get the Fund
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index funds and ETFs a run for
investors’ money, but I remain skeptical.
If you are looking for a basic small-
cap index fund, you can’t really go
wrong here, though I’d go with either
the S&P or CRSP options over the
Russell ETF. As I said, Russell has been
a notable laggard across the small-cap
space as the stocks of higher-quality
companies that the S&P and CRSP
indexes focus on have fared better.
Once more, all of these options can
be bought and sold for free as ETFs.
Russell 2000 Value ETF, Hold
S&P SmallCap 600 Value ETF, Hold
SmallCap Value Index, Hold
Again, I don’t think you can neces-
sarily go wrong here, though I’d still
shy away from the Russell index. As
for whether to pick S&P SmallCap
600 Value ETF or SmallCap Value
Index, I think it depends on your view
of the world. The CRSP index that
SmallCap Value Index seeks to track
has historically outpaced other indexes
in bull markets, while S&P’s small-
cap index has held up relatively bet-
ter when markets headed lower. What
I wouldn’t recommend is switching
between the two indexes in an attempt
to time markets.
Tax-Managed SmallCap
Sell. This fund’s days are numbered,
but don’t tell that to Donald Butler and
William Coleman—they just replaced
Michael Buek as co-managers here
in early April. The two new skippers
will continue Buek’s charge of trying
to track the S&P SmallCap 600 index
while avoiding any untoward capital
gains. Sounds like a good idea. So why
are the fund’s days numbered?
Well, to my way of thinking,
Vanguard’s S&P series of ETFs, which
are already very tax efficient, has made
this Tax-Managed fund obsolete. In
fact, in 2014, Vanguard merged its
former sibling funds Tax-Managed
Growth & Income and Tax-Managed
International away. How long this fund
sticks around is anyone’s guess, but
it’s a black-and-white TV in the age of
80-inch flat panels. n
>
Delivering fairly
significant extra return,
mid-cap stocks historically
haven’t take on much
if any extra risk.
A sweet spot, indeed.