First, let's talk performance. This fund isn't some Johnny-come-lately -- it's got a strong long-term record, outperforming 62 percent of its peers over the past thirty years. And over that period, its 10.7 percent average annual return would have turned your $10,000 initial investment into $209,000 today. Its average competitor, on the other hand, has earned just 10 percent, reducing that final value to $176,400 -- or nearly $23 grand less.
Not bad right? But this isn't one of those funds that zoomed out of the box when assets were low only to stumble as it grew in size. (Yeah, we're looking at you Magellan.) Over the past 15 years it's outpaced 65 percent of its peers. Over the past decade, it's outperformed 53 percent of them; and over the past five years, it's beaten 61 percent of its peers.
So yes, it's a consistently strong performer. How consistent? Over the past 11 years, its annual return has ranked in the top two quartiles of its category eight times. The other three years? A third-quartile ranking.
Like I said: consistent.
And this fund doesn't take a lot of risk swinging for the fences. Its approach is more of the steady-Eddie variety, owning lots of stocks across a broad range of industries. Which is nice because it won't leave you sitting there eating your hat because your fund's stalled while the market's going gangbusters.
Still with me? Good. Let's take a look under the hood.
It's got low turnover, and you know what that means: It helps keep Uncle Sam's hand outta your pocket. This fund's ten-year tax-adjusted return has outpaced 61 percent of the other funds in its category, and its tax-cost ratio (as calculated by Morningstar) is a rock bottom 0.35 percent, better than 74 percent of its peers.
And this isn't one of those funds that's gonna move all over the style box as its manager tries to add value. It's a large cap blend fund; always has been, and if the manager has anything to do with it, always will be.
Speaking of that manager, he's been there since 2005, and is overseen by the previous manager, who's been there since 1987. So there's little reason to fear that the guy's gonna "take his talents to South Beach" if you know what I mean -- cashing in on his record and leaving his shareholders in the lurch.
And speaking of shareholders, they've done pretty well for themselves too. This isn't a fund where you can drive a truck between its returns and what the poor saps who piled in too late have earned. Over the past 15 years, the investor return has lagged the fund return by less than one percent per year. And the 5.9 percent those investors they've earned is better than 60 percent of investors in other funds.
Expenses? Don't worry about it. They're low -- real low. I'm telling you, you'll probably spend more on coffee this year than you will on this fund. Sales loads? Get outta here. No loads here, kid.
I'm telling you, this fund is the real deal. Do yourself a favor and check it out.
The name? Oh, didn't I mention that? Listen close. It's the Vanguard 500 Index fund.
So are you in, or what?
I always laugh when I hear people dismissing index funds, claiming that the notion of "settling" for the market's return might be fine for investors who don't know what they're doing, but that the approach is somehow beneath someone with their skills.
And when I hear that sort of argument, I often wonder: What if, when he launched the first index fund, John Bogle didn't tell anyone it was an index fund? What if he just called it the Bogle Large-Cap fund (OK, so he'd have to work on the name) and let everyone think it was actively managed?
More than three decades later, the record would be the same as the one described above -- remarkably consistent, and well above-average. The fund, in short, would be sporting the sort of numbers that would make a fan of actively managed funds drool.
And yet despite this fund's record, those same investors take a pass, simply because it's an index fund, and they think they know better.
So you tell me who's smart and who's not.
You should follow me on Twitter here.
Most Popular This Week: