If you’re a Vanguard investor, chances are your 401(k) is dangerously exposed. Here’s why…
Fully 2/3 of Vanguard’s offerings are index funds. Consider for a moment what an index fund actually does. It tracks the market, plain and simple. You can expect the share price to go UP when the market is buoyant, and also to go DOWN when the market is under pressure. And there's a fair amount of uncertainty out there as we move through Trump's first 100 days and the policies — like trade barriers and tariffs — that could hurt business rather than help it.
Problem is, index fund owners have been spoiled the last few years. They aren’t prepared for a market pullback. They’ll be blindsided when it happens. Utterly devastated.
Warning sirens are blaring…
In a CNN/Money article called ‘A Billionaire’s Warning on Index Funds’, even Charlie Munger, Warren Buffett’s right-hand man at Berkshire Hathaway, stated he believes the indexing mania may have gone too far.
As you’re about to discover, the indexing “Hoax” isn’t the only time bomb hiding inside your Vanguard 401(k)…
An Absolute Necessity for ALL Vanguard Investors
You may be shocked to hear me say this. But I honestly believe up to 95% of Vanguard’s offerings are disappointingly average (at best)… ho hum… even downright inferior.
On any given day, less than 10% of Vanguard funds are good enough to earn my dollars.
Now is the time to make one or two minor adjustments — to set yourself up for MAJOR profits. But before you do, I want you to glance at my “go-to” guide for answers to almost every question you could ask about Vanguard… its funds… its practices… and its management.
SPECIAL BONUS: For a very limited time, I’m giving the shop away in my “Little Black Book” of tips, tricks, secrets and loopholes that Vanguard doesn’t want you to know.
It’s called “The Answer Book for Vanguard Investors.” It’s jam packed with secret tips, tricks and tactics to keep you ahead of the average investor from Day #1. I consider this Special Report your essential primer for upping your game.
This exceptional report is valued at $79, but you get it absolutely FREE when you take The Independent Adviser for Vanguard Investors for a test drive today.
Page 2 Costly trap for tax-conscious investors Page 9 Smartest fund to own today Page 12 Don’t invest your distributions automatically Page 13 Stay clear of the “dumb” tax bracket Page 20 The magic of our Hot Hands strategy Page 23 Sit back and collect checks Page 26 Tips on getting into a closed fund! Page 30 Beware these risky funds Page 34 When to sell in December (tax-wise) Page 36 Don’t get DOUBLE-taxed Page 38 the ‘stepped-up’ rule for gifts & inheritance
It’s 51 pages long — chock full of all the tips, hints and tactics for making Vanguard pay YOU. It’s like my Little Black Book of Hidden Secrets you’ll never hear about from the folks at Vanguard. Or if you do, it may be 40 years too late…
Here are a few more secrets you need to know about today:
Why should you rely on me for independent Vanguard advice? I have a HIGHLY PERSONAL reason for demanding the utmost in performance from Vanguard since a large share of my family’s liquid assets are invested in Vanguard funds.
I don’t just give advice; I put my money where my mouth is.
As a completely independent adviser who doesn’t take advertising dollars or any payment at all from Vanguard, and with my own money on the line, I’m free to be a thorn in Vanguard’s side. And I’m the first, and sometimes the only person to call foul when I see the little guy getting a raw deal.
Lately, it’s been happening a lot…
Vanguard’s been showing poor judgment on a number of crucial fronts.
Funny thing, though. I’ll bet you haven’t heard even a whisper about any of these things. Nope, not on their website… not in their newsletters… and nowhere in the small print.
Once again, it’s up to me to blow these stories wide open. Miss one and your bottom line could be hurting. Miss them all… and don’t say I didn’t warn you.
“We do NOT pick average Vanguard funds. We pick only the cream of the crop – and those tend to be the most elite actively managed funds.”
Dan Wiener & Jeff DeMaso Editors, The Independent Adviser for Vanguard Investors
My point is Vanguard won’t tell you what to make of any of these crucial developments.
Sure, they’ll tell you what happened — but not what to do about it, which works for them, but not for you.
I’ve gotten to know Vanguard’s public relations strategy very well over the years. Investment strategies change and fund managers come and go — sometimes voluntarily, sometimes not — with little fanfare and practically no explanation, other than attempts to reassure shareholders that everything will be ok.
“[Wiener’s portfolios’] average risk- adjusted outperformance is …substantial … Wiener’s star is his Growth portfolio.”
— Vanguard versus DFA & WisdomTree, and the Value Added by Dan Wiener, Edward Tower and Yichong Zhang, Duke University Department of Economics
The Good… The Bad…and the Ugly
Don’t get the wrong impression and think that Vanguard is my enemy. Quite the opposite! I love what they’ve done for me and millions of other investors. Bringing costs way down has helped us gain a leg up during tough times (and good times, too).
Vanguard has a gigantic stable of 170+ mutual funds and ETFs for you to choose from. Yet, as you have probably figured out by now, not all of the funds are created equal. In fact, there’s a HUGE range of winners and losers within Vanguard.
“I am more in control of my own investments without brokers/financial planners trying to “sell” me everything.” — S.B., Fair Haven, NJ
“Dan’s unambiguous and well balanced advice is a great aid to my decision making and planning.” — G.H., West Hartford, CT
“[Dan] gives me insight into Vanguard that Vanguard [itself] won’t give me.” — R.D., Morristown, NJ
I’ve said it before and I’ll say it again. The #1 thing you can do to improve your chances of boosting your Vanguard returns in the long term, is to reposition a portion of your funds AWAY from index funds – and straight INTO Vanguard’s most elite active funds.
Never forget, each percentage point can mean hundreds or thousands of dollars won or lost, depending how much you have invested at Vanguard.
A True Giant Walks Among Mortals
Active investing can be way better than chasing an index. Here’s a case in point.
Don Kilbride: manager of Vanguard’s Dividend Growth fund. Frankly, the shareholders ought to throw him a party! The 52-year-old Wellington Management partner has generated stellar returns, beating the stock market while taking on less risk, and he's consistently outperformed his index bogey.
Since taking the helm of Dividend Growth in February 2006, Kilbride has steered the fund through both bull and bear markets. I always like to see how a manager performs over a full market cycle and Kilbride has had a good one during which to demonstrate his skills. Take a look at the relative performance chart below comparing Dividend Growth to Vanguard’s 500 Index fund.
The slowly rising line early in this full 10-year cycle since Don took over turned into a huge spurt of outperformance during the financial crisis, when Dividend Growth outperformed 500 Index by a full 13 percentage points.
True, in the immediate aftermath of the market bottom in 2009, when stocks soared, 500 Index outpaced Dividend Growth for about two years. But as you can see Kilbride has more than earned his shareholders' respect with a gain from January 2006 through January 2016 of 122.9% versus 500 Index's 85.3% return—a 44% beat!
Don Kilbride is an absolute gem. Dividend Growth is a great fund, with a dedicated manager whose own money is invested alongside shareholders while he pursues a disciplined investment approach that makes big profits in bull and bear markets.
In late July 2016 however, Vanguard closed Dividend Growth to all new investors. If you already own the fund, you can continue to add money to it without restriction. With just over $30 billion in assets, it's the fourth largest actively managed stock fund at Vanguard (behind Health Care, PRIMECAP and Windsor II), so it was probably only a matter of time before Vanguard closed the fund. Closing Dividend Growth will keep assets from ballooning out of control, so Kilbride can continue his index-beating ways.
One crucial fact is going almost unnoticed by American investors.
While many marquee Vanguard funds like PRIMECAP, Wellington and Wellesley Income are managed by a single advisory team, the firm has moved most of its active funds to a “multi-managed model” over the past decade.
Why go from one management team to many? Adding sub-advisers to funds allows Vanguard to manage capacity and cut fees. That’s the ultimate Vanguard mantra—and most of the time it’s a good thing.
But I question the wisdom of plowing as many as eight sub-advisers into a single fund. Here’s where I part ways with Vanguard management…
Vanguard may be excellent at implementing what they want. But what they want isn’t necessarily good for investors like you.
I’ve argued for years that slotting additional managers into funds is just “dumbing them down,” and the result is second-rate, index-like performance. The proof is in the pudding. You cannot point to funds with four, five, six advisers and say these are strong performing funds.
Here’s another example of cost-cutting gone too far…
I’ve been warning for some time that you need to keep an eye on your accounts, particularly if you “consolidated” your brokerage and mutual fund accounts as Vanguard has requested you do. Plenty of Vanguard investors have written to me about problems with dividends, taxes and bounced checks stemming from this consolidation process. But that’s not all.
Meet Dan Wiener
America’s leading expert on investing in Vanguard funds”
Daniel P. Wiener is editor of The Independent Adviser for Vanguard Investors, a monthly newsletter that keeps abreast of recent developments at Vanguard, and the annual FFSA Independent Guide to the Vanguard Funds.
Through his newsletter and guide book, Dan helps tens of thousands of Vanguard investors choose wisely among more than 100 Vanguard mutual funds. The Independent Adviser is a 5-time winner of the Newsletter & Electronic Publishers Association’s Editorial Excellence Award.
Mr. Wiener is also founder and chairman of the Fund Family Shareholder Association and chairman and CEO of Adviser Investment Management, Inc., an investment advisory firm. He previously spent almost a decade writing about personal finance for US News & World Report and Fortune magazines. Mr. Wiener has also written for The New York Times and other national publications.
According to TheStreet.com’s investigative reporter Susan Antilla, Vanguard sent 71 emails about 57 different clients’ financial transactions ranging from $3 to $50,000 to a single shareholder, who says none of the emails were about his own accounts.
Vanguard’s response? They called it a “one-time, isolated matter,” and blamed an unidentified system error. Listen, whether Vanguard is obfuscating or not, the simple truth is that when expenses are super-low, something has to give, and one place that may be having an impact is in Vanguard’s information technology department.
Hiding behind the veil of a “one-time, isolated matter” may calm investors this time, but I remain unconvinced and recommend, yet again, that you keep a very close eye on your accounts and any transactions that take place within them. If you suspect anything, document your suspicions and call Vanguard immediately.
A note to me won’t hurt either.
The Smartest Decision You’ll Make in 2017
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Normally The Independent Adviser for Vanguard Investors costs $229 for a 12-month membership. That itself is a bargain when you look at how I’ve been sheltering — and boosting — the profits of regular Vanguard investors all across America by sorting out the best and worst funds and exposing snafus… and screw-ups along the way.
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But it’s not all good news…
Depending on response levels, I may need to end this special offer at 11:59 p.m. today.
Sadly, after that, this exclusive offer may become null and void.
After all, I’m predicting many more BIG announcements… SURPRISING moves… and INCREDIBLE slip-ups over at Vanguard in the months to come.
Each Thursday, you’ll receive our Vanguard Hotline sent by email. Inside you’ll find an update on the market, economy, and Vanguard with highlights on our existing holdings, and any new latest developments on my watch list.
Exclusive news updates posted to my members-only website… when I simply can’t wait to include them in my weekly bulletin.
Full 24/7 access to our exclusive ‘members only’ The Independent Adviser for Vanguard Investors website, jam-packed with my latest analysis, advice and recommendations.
Meet Jeff DeMaso
"You also get a top-notch scholar and researcher in your corner”
Jeffrey DeMaso is Co-Editor and Director of Research for the multi-award winning Independent Adviser for Vanguard Investors private advisory service. Together with Dan Wiener, Jeff spends hours each and every week researching all of the latest activities and news developments within the Vanguard family of mutual funds.
If it impacts your portfolio, count on Jeff to raise a red flag. His market views and opinions have appeared in such publications as USA Today, Forbes, The Wall Street Journal, Barron's, InvestmentNews, and Kiplinger, to name a few.
Jeff graduated magna cum laude from Tufts University with a B.A. in economics in 2006, holds the Chartered Financial Analyst designation and is a member of the CFA Institute and the Boston Security Analysts Society. He also leads the analyst team as Director of Research for Adviser Investments, LLC.
Password-protected access to the exclusive ‘Adviser Online Forum’ — a meeting place for like-minded investors, both experienced Vanguard investors and newcomers.
…And, of course, each month you’ll receive my 12- to 16-page newsletter chock-full of everything you need to know about Vanguard — but were afraid to ask. The good, the bad, and the downright ugly.
Inside each issue, you’ll receive:
My Performance Review of all Vanguard’s funds (mutual funds, ETFs, and variable annuities) for retail investors complete with Buy, Sell and Hold ratings
Timely and URGENT interviews with Vanguard’s top fund managers
Vanguard Fund distribution schedules
My proprietary risk and return analysis
Plenty of notice when my research shows a new fund is opening
Advance warning when I’m convinced a fund is facing closure
My top alternatives when funds do close
My analysis of overall market conditions and key trigger events on the horizon
A ‘deep-dive’ on performance results for all four of my model portfolios (as a reminder, that’s my Growth Portfolio… my Conservative Growth Portfolio… my Income Portfolio… and my Growth Index Portfolio which is designed for investors who want to index exclusively)
Frankly, could it get any better? Yes, it can…
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EXTRA BONUS GIFT #1: Vanguard’s Best (and Worst) ETFs Exchange-traded funds, or ETFs, were a misunderstood, newfangled investment ‘product' just a decade ago. Today, they are hot, and deservedly so. In many ways they are stealing assets from traditional index mutual funds. Recognizing this, Vanguard upped its ETF offerings in 2010, with a series of Russell and S&P indexes, including the S&P 500. Find out the best and worst of the bunch.
EXTRA BONUS GIFT #2: Vanguard’s Secret Fiasco: 25 Toxic Funds To Sell Now Don’t wait for Vanguard to inform you when one of their funds is underperforming the market — by a HUGE margin. That responsibility falls to me. Don’t be surprised if one of these funds is in your retirement portfolio right now — quietly sucking profits out of your year-end statement.
Try It Out on My Dime. I’m Assuming All the Risk.
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I offer that guarantee because I want you to know I’m 100% committed to making you PERMANENTLY RICHER — beginning right now.
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Sincerely, Daniel P. Wiener Editor, The Independent Adviser for Vanguard Investors
P.S. Remember, I’ve only given you the tip of the iceberg when it comes to all the Vanguard snafus… secrets… and screw-ups I’ve uncovered in recent months. I have a boatload more to come. Plus you immediately get 27 stunning secrets in The Ultimate Answer Book!
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