(PUB) Investing 2016

And don’t buy Dividend Growth for its growing dividend. The fund’s distributed yield, on average, hasn’t been significantly higher than the dis- tributed yield on 500 Index. At its best, Dividend Growth’s yield was just 0.29% better than the index fund’s, and at times, it’s worse. In fact, at the end of February, the fund’s 1.90% 12-month yield was 20 basis points lower than 500 Index’s. The reason to buy Dividend Growth is Don Kilbride. When he or Vanguard talks about growing dividends, what they’re really talking about is the resulting capital appreciation that comes when investors bid up the price of stocks where dividends are rising. It’s not the dividend itself, but the greater value that a growing dividend implies. The single-manager fund is becom- ing a rarity at Vanguard, but Dividend Growth is a great one, with a dedicated manager whose own money is invested alongside shareholders while pursu- ing a disciplined investment approach. Dividend Growth could easily serve as your core stock holding. It’s one of my biggest holdings personally and is a sig- nificant holding in the Model Portfolios . If you don’t own it, you should. n

believes management teams have the will and desire to regularly raise dividends, and where battleship balance sheets allow them to do so. Currently he’s focused on just 45 companies that fit his criteria, not 500. Vanguard offers another fund that attempts to do about the same thing as Dividend Growth, but in an indexed format— Dividend Appreciation Index . That fund, which debuted just weeks after Kilbride took over Dividend Growth, tracks the NASDAQ U.S. Dividend Achievers Select index, which is the same index against which Kilbride is measured. As I said, Kilbride has consistently put that index fund to shame as the relative performance chart on page 15 shows. The trajectory of that rising line is testimony to Kilbride’s stock-picking prowess. From Dividend Appreciation Index’s inception through the end of January, Dividend Growth has gained a total 114.3%. The index fund gained 83.8%. (500 Index was up 80.3% over the period.) Don’t buy Dividend Growth for the short term. If the markets go signifi- cantly higher in a quick spurt, this fund will lag. Dividend Growth is for long- term investors. >

The Ultimate Fund Guide

WITHOUT TURNING ON A COMPUTER, without even looking up a telephone number, you can have at your fingertips all the data on your favorite Vanguard funds—with the new FFSA 2016 Independent Guide to the Vanguard Funds . This year, we have more data than ever, including our proprietary risk and return statistics like rolling returns and Maximum Cumulative Loss (MCL), plus our take on new funds Vanguard plans to launch, such as Core Bond, Emerging Markets Bond, International Dividend Appreciation Index and International High Dividend Yield Index . Even with our huge computer files and access to fund managers, my co-editor Jeff DeMaso and I still find ourselves thumbing through the annual guide to find that quick MCL statistic, fund correlation, or even a total return figure for 2006. My 2016 Guide is a great resource for me, and for you. Call Customer Service at 800/211-7641 for all the details on how to sign up for the guide.

DO-IT-NOW ACTION RECOMMENDATIONS 4 Though High-Yield Corporate and Health Care stumbled out of the gate in 2016, Jeff and I are sticking with them for the long term. You should, too. (See pages 1 and 7) 4 Saving early for retirement isn’t a lesson most teens learn in high school. But parents and grandparents can teach their teens a thing or two while giving them a retirement head start. (See page 12) 4 Don Kilbride has spent 10 years on Dividend Growth proving that active management works. There’s no reason his success can’t continue. (See page 15)

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

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-

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.

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.

16 • Fund Family Shareholder Association

www.adviseronline.com