(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 Mid-sized stocks outperform their smaller and larger brethren. If you don’t own them,
Capital Opportunity or the S&P-based ETFs are your best bets. (See page 1)
4 Distribution season is upon us and funds like Health Care and Long-Term Treasury are
among those with the largest realized gains at the moment. You may not want to add to
them in taxable accounts. (See page 3)
4 Make sure you have a decent weighting of tech stocks in your portfolio to take advantage
of Tech Winter, the seasonal bull market that begins now. (See page 13)
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
from our monthly newsletter and annual guide-
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
updated daily.)
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
computer or mobile device you own. It’s like being
right there in our office with us, as your own inde-
pendent fund analyst on our research team, with
our proprietary risk and return statistics like rolling
returns, relative returns, Maximum Cumulative
Loss (MCL), and many more at your fingertips.
And the best part is, you can get the Fund
Analyzer for only $199 a year. For details on
how you can try it risk-free for 60 days, visit
or call
800/211-7641 and mention code MT9207.
Lowell, editor of Fidelity Investor,
, supplied me
with this information.)
And remember what I said at the start:
The MSCI Information Technology
index, upon which Vanguard has based
its Information Technology Index fund
and ETF, has only a bit better than a
40% record of beating the stock mar-
ket over the four-month Tech Winter
period. True to form, over the past 10
Tech Winters, the technology index has
outperformed just four times. So it’s not
a sure thing, but giving active manag-
ers a hand in making technology stock
choices increases the odds in your favor.
Weighing the Options
Whenever I speak about this phe-
nomenon, I always say that I don’t rec-
ommend investors make major portfo-
lio or investment decisions based upon
short-term trends, such as those we see
during Tech Winter.
Should you want to both own great
funds run by great managers, and try
to make a bet on a good tech sea-
son, my favorite choices remain the
PRIMECAP Management-run funds:
Capital Opportunity, PRIMECAP and
PRIMECAP Core. The funds’ tech-
nology weights stood at 34.0%, 36.8%
and 30.1%, respectively, at quarter-end.
Obviously, with all of these funds closed
to new investors, I recommend you get
yourself some shares in PRIMECAP
Odyssey Growth (POGRX) before it
closes as well.
Would I bet on other tech-heavy
active funds in the Vanguard firma-
ment? Nope. Despite heavy tech hold-
ings ranging from 26.2% to 38.5%
of assets at Explorer, Morgan Growth
and U.S. Growth, their multimanager
amalgams don’t make them particularly
attractive over the long haul. (Though
as I said last year, the newest manage-
ment iteration at U.S. Growth seems
to be working.) They may outperform
during Tech Winter , but who’d want to
own them for longer than that?
My goal this Tech Winter remains
consistent with my philosophy as a long-
term investor: To stick with the disci-
plined strategy for long-term growth that
I employ in my Model Portfolios and take
any short-term gains or losses in stride.
We can’t count on a predictable gain
every winter, but we can count on solid
management and proven results, which is
why I like the PRIMECAP-run options.
And if we get a bit of a tailwind over the
next four months, then all the better for
us. For you traders, have a ball! n
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