Steadfast Finances
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Vanguard Has 20 Actively Managed Mutual Funds that Beat S&P 500 Index Fund
Vanguard, for those who did not know, has a few actively managed mutual funds, tax advantaged funds, and even a few sector specific funds. All have varying fees/expense ratios, a few of them have very high investment minimums ($250,000 plus), and yes, even a few are closed off to new investors.
I realize that speaking out against index funds — like one Jim Cramer last week — is black sheep territory (been there, done that), but I came across an interesting observation tonight.
When I compared the 10 year performance of Vanguard’s actively managed funds versus their flagship index fund, S&P 500 index (VFINX), over the last 10 years, 20 actively managed funds have outperformed the S&P 500.
Don’t believe me… see Vanguard’s own data below (captured via a screen shot).
By the way, the current 10 year return for Vanguard’s S&P 500 index fund is a negative 3.08% (–3.08%).
[RSS Readers may need to click through]
Shocking isn’t it. Who would have thought Vanguard’s own fund managers would have bested their bread n’ butter index funds. Being a fund manager at Vanguard must be an oddity in itself considering they’re the index fund pioneers, but I found this revelation quite unusual.
Maybe the investment managers at Vanguard are doing better homework than their counterparts at Standard & Poors?
Will this information make you give Vanguard’s actively managed funds a serious look next time knowing this information? Does this change your opinion of Vanguard knowing this?
2 Comments
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4:24 pm
Vanguard has made a name for themselves not only as the pioneer of the index fund, but also as a champion of low-cost funds.
Although I do believe in the power and simplicity of index funds, I’ve opted instead for their Wellington fund as the core of my portfolio, for its long-term, proven performance, and also because it’s been around since before the Great Depression.
As Bogle would say, “the past is not prologue” when it come to actively managed funds, but it’s a safe enough risk for me to take. Time will tell.
[Reply]
Matt Reply:
June 3rd, 2009 at 4:36 pm
@ Dude,
You’re absolutely right! I was actually surprised to stumble across this data, but Vanguard really seems to have proven themselves as a low cost, actively managed mutual fund provider.
It’s too bad they don’t publicize it more, but that would probably cannibalize — or tarnish — some of their index fund revenue. They may not have a choice now that Charles Schwab has reduced their index fund management fees to 0.09%.
Thanks for commenting.
[Reply]