Vanguard Funds

m741 · Post by **m741** » Wed Mar 23, 2011 4:05 am

I'm looking to divert some of my extra savings from an investment account (stocks, bonds and ETFs owned directly) to a Vanguard account (mutual funds only).
Seeing as Vanguard is extremely popular, what specific Vanguard mutual funds do people recommend? I'm personally looking for something with decent capital gains and some regular income (something like DVY). But any fund suggestions are welcome - I'm just looking for a flavor of what's out there.

KevinW · Post by **KevinW** » Wed Mar 23, 2011 5:30 am

Vanguard has a fund for just about every mainstream investing strategy, so my meta-answer is, I recommend whichever Vanguard fund uses your preferred investing strategy.
If you ask someone at Vanguard they will probably tell you to put your entire stock allocation in Total Stock Market Index.
You mentioned DVY. Vanguard has several dividend funds, both indexed and actively managed. High Dividend Yield Index is probably the most similar to DVY.

CestLaVie · Post by **CestLaVie** » Wed Mar 23, 2011 5:19 pm

Very popular Vanguard funds include Wellington and Wellesley. Those two funds have provided solid capital gains and a decent amount of regular income in the past. That's why they are popular among retirees.
For indexers, the total stock market index, total bond market index and total international stock index funds are extremely popular. I personally do not like the total bond index fund (too many mortgage-backed securities). I prefer the intermediate bond index fund instead. I also like the more comprehensive FTSE All World ex-US index fund as an alternative to the total international index fund.

m741 · Post by **m741** » Thu Mar 24, 2011 1:14 am

Thanks - the Wellesley fund looks interesting.

dot_com_vet · Post by **dot_com_vet** » Thu Mar 24, 2011 11:46 pm

Some people swear by Vanguard's GNMA fund. I use it as an alternative to a savings account for cash that I won't need in the short term.

Hoplite · Post by **Hoplite** » Fri Mar 25, 2011 1:45 am

I've had good results with Vanguard's Primecap fund, though new investment is limited (I think it's currently $25,000 but not sure because it changes). For parking funds, I've used the STAR fund, which is a blend of the other Vanguard funds diversified across stocks and bonds. The STAR annual yield over the past 10 years has been just over 5%, better than money markets/CDs and even better than some riskier stock funds for the time period. The benefit is diversification across different Vanguard funds without paying individual fees for each fund.

photoguy · Post by **photoguy** » Fri Mar 25, 2011 2:30 am

I have a bunch of funds with vanguard: 19 different funds spread amongst bond, equities, international/domestic, cap size, value/growth. However, at this point i don't particularly care for wellington/wellesley because they are blends and I would prefer to own the individual components.

m741 · Post by **m741** » Fri Mar 25, 2011 3:21 am

@photoguy - any particular funds that stand out for you? You've got quite a portfolio.

pka222 · Post by **pka222** » Fri Mar 25, 2011 3:55 am

On a related note does anyone know if Vanguard has an ETF that is similar to the PSQ- an inverse of the daily performance of the NASDAQ 100? It seems to me with QE2 coming to an end, Japan stopped in its tracks, Libya in flames and unemployment in the US at near 10% the recovery is about to flat line and PSQ would be a good way to get in on the right side of the action. I'm looking at a 6 to 12 month time horizon. Any thoughts?

photoguy · Post by **photoguy** » Fri Mar 25, 2011 7:59 am

Almost all of my funds are index funds so they don't really stand out except through low costs. I try to avoid the actively managed funds vanguard does have but for historical reasons I do a few of those.
I really like the emerging market fund because it has a very low expense ratio for it's class (0.22%) . My old 401k had an EM fund that essentially tracked the same index but had an expense ratio of over 1%.
@PKA222 vanguard doesn't have anything like PSQ. Presumably you would only buy the fund if you were market timing (i.e., you think the market is going to drop in the near future). This completely goes against vanguard's philosophy of stay the course -- Vanguard actively discourages market timing behaviors for several reasons including that it increases turnover and costs for other investors. Finally, why do you believe that the market hasn't already considered the factors you mentioned and incorporated them into the stock prices?

pka222 · Post by **pka222** » Fri Mar 25, 2011 8:09 pm

Hi Photoguy,

I'd be keen to hear your thoughts on this. I'm under the impression (perhaps misinformed?) that PSQ is a play on a declining NASDAQ - but is there a reason not to hold it for a few months if one believes that the NASDAQ will decline over time?
As for why I'm thinking this -it is primarily due to the idea that dollar is at a point where action either way leads to stocks crashing. Te Fed's current actions to destroy the dollar, which has lead to higher input-costs that then will gut stocks and impoverish households. It the fed backs off and let the dollar rise, then the risk trades (equities and commodities) will plummet. I'm not seeing a way out of this - other than a contrarian play, perhaps you have some insight?
Over all the agreement that the dollar will drop and gold will rise - this idea is held among what it seems to be the entire market- makes me think of the adage that house prices never drop- everyone know it- this thinking causes bubbles.
thanks for the input
Cheers

miyatarama · Post by **miyatarama** » Fri Mar 25, 2011 10:11 pm

m741, my advice is to go with a brokerage account at Vanguard. This will let you buy Vanguard ETFs (currently no fees, mutual funds, and even outside ETFs and stocks (I think the first 20 or so are at $7). This flexibility is nice to have. I like ETFs better because you can trade them during the day and set limit prices on your orders. Also, the fees are generally smaller.
My favorites are VWO (Emerging markets) VSS (Small Cap international excl US) and VBR (small cap value).
pka222, if you think you can guess the direction of the market or individual securities within a time frame, there is nothing better than option trading to capitalize on that. All of the leveraged inverse ETFs are just packaged options, so you would be better off understanding and investing in the underlying securities.
And yes, I am aware of the irony of that last paragraph and yet investing in index ETFs.

Dienekes · Post by **Dienekes** » Sat Mar 26, 2011 4:18 am

My understanding of a Vanguard brokerage account is that there are no brokerage fees for trading Vanguard ETFs (unless you trade very frequently). There is, however, a $20 maintenance fee (for assets below $50,000).

photoguy · Post by **photoguy** » Sat Mar 26, 2011 6:11 pm

I have no insight whatsoever regarding the direction of the stock market, other than long term it tends to go up and stuff that is public knowledge is already incorporated into to the prices. The vast majority of people who have tried to predict the market were either (1) wrong or (2) made predictions so inspecific that it was impossible to make money (over and above the normal returns).
For example, people have been clamoring about overpriced bubbles in many asset classes for years now. But how many actually made their fortune shorting the market in recent times? The problem with bubbles is that although many people can recognize that they may be in one, getting the timing right is very difficult -- the bubble can keep going on longer than you can stay solvent.