(PUB) Investing 2016

index funds and ETFs a run for investors’ money, but I remain skeptical. If you are looking for a basic small- cap index fund, you can’t really go wrong here, though I’d go with either the S&P or CRSP options over the Russell ETF. As I said, Russell has been a notable laggard across the small-cap space as the stocks of higher-quality companies that the S&P and CRSP indexes focus on have fared better. Once more, all of these options can be bought and sold for free as ETFs. Russell 2000 Value ETF , Hold S&P SmallCap 600 Value ETF , Hold SmallCap Value Index , Hold Again, I don’t think you can neces- sarily go wrong here, though I’d still shy away from the Russell index. As for whether to pick S&P SmallCap 600 Value ETF or SmallCap Value Index, I think it depends on your view of the world. The CRSP index that SmallCap Value Index seeks to track has historically outpaced other indexes in bull markets, while S&P’s small- cap index has held up relatively bet- ter when markets headed lower. What I wouldn’t recommend is switching between the two indexes in an attempt to time markets. >

Tax-Managed SmallCap Sell. This fund’s days are numbered, but don’t tell that to Donald Butler and William Coleman—they just replaced Michael Buek as co-managers here in early April. The two new skippers will continue Buek’s charge of trying to track the S&P SmallCap 600 index while avoiding any untoward capital gains. Sounds like a good idea. So why are the fund’s days numbered? Delivering fairly significant extra return, mid-cap stocks historically haven’t take on much if any extra risk. A sweet spot, indeed. Well, to my way of thinking, Vanguard’s S&P series of ETFs, which are already very tax efficient, has made this Tax-Managed fund obsolete. In fact, in 2014, Vanguard merged its former sibling funds Tax-Managed Growth & Income and Tax-Managed International away. How long this fund sticks around is anyone’s guess, but it’s a black-and-white TV in the age of 80-inch flat panels. n

Analyze This

When I started this newsletter in 1991, I had to thumb through paper SEC filings and copy fund data by hand. But now, thanks to advances in technology and the efforts of our team at InvestorPlace, Jeff and I are able to bring you an unprecedented research tool for Vanguard investors: The Independent Vanguard Fund Analyze r. The Fund Analyzer takes everything you know from our monthly newsletter and annual guide- book to a whole new level. Like our guidebook, it contains comprehensive data on every Vanguard fund we track. And like our newsletter, it’s updated every month. (Some data is even updated daily.) But unlike either, it gives you direct access to a suite of online, interactive charts, tables, and other analytical tools created directly from our in-house database—and it’s designed to work with any computer or mobile device you own. It’s like being right there in our office with us, as your own inde- pendent fund analyst on our research team, with our proprietary risk and return statistics like rolling returns, relative returns, Maximum Cumulative Loss (MCL), and many more at your fingertips. And the best part is, you can get the Fund Analyzer for only $199 a year. For details on how you can try it risk-free for 60 days, visit www.thefundanalyzer.com/JoinNow or call 800/211-7641 and mention code MT9207 .

DO-IT-NOW ACTION RECOMMENDATIONS 4 Stay focused and don’t get seduced by Precious Metals & Mining ’s near-record returns this year. (See page 5) 4 Know thyself. Mutual funds are for investors, while ETFs are for traders. Don’t be fooled into thinking new means better. (See page 6) 4 Prepare for a rocky month. After the summer calm, it’s September, not October, that could rock investors’ worlds. (See page 7)

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

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