Dividend Growth Fund VDIGX

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Vikingfan
Posts: 2
Joined: Thu Nov 15, 2018 9:01 am

Dividend Growth Fund VDIGX

Post by Vikingfan » Thu Nov 15, 2018 9:17 am

I am guilty of Boglehead sin of market timing. A year ago I moved the $200,000 in my deferred comp account (457) from the 500 index to VDIGX. After reading a couple of Jack's books and discovering this wonderful website I want to be all in on indexing. The problem is that it seems to be working out and we seem to be moving into more of a defensive posture market wise. I feel like staying this particular course for a few more years. I am 53 and about 5 years before I could retire from local govt. job with a solid pension. Wife is an educator with similar situation (she has $180,000 in 403b fidelity 500 index). We probably won't even tap our 457/403b money until RMD's. Should I move the money into the 500 index, Vanguard Balanced index (VBIAX), or stand pat?

PFInterest
Posts: 2684
Joined: Sun Jan 08, 2017 12:25 pm

Re: Dividend Growth Fund VDIGX

Post by PFInterest » Thu Nov 15, 2018 11:24 am

i would compare it more to VLACX (large cap). you are actually down after 1 year, but whichever.

if you are going to market time, you need a plan.

write that down. discuss with your wife.

then stop.

mtmingus
Posts: 22
Joined: Sun Jan 07, 2018 4:15 pm

Re: Dividend Growth Fund VDIGX

Post by mtmingus » Thu Nov 15, 2018 11:33 am

VDIGX is one of only a few actively managed funds for me. Now it’s closed. It has been doing well for us in the last a few years. I will keep it.

snailderby
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Joined: Thu Jul 26, 2018 11:30 am

Re: Dividend Growth Fund VDIGX

Post by snailderby » Thu Nov 15, 2018 11:39 am

Vikingfan wrote:
Thu Nov 15, 2018 9:17 am
I am guilty of Boglehead sin of market timing. A year ago I moved the $200,000 in my deferred comp account (457) from the 500 index to VDIGX. After reading a couple of Jack's books and discovering this wonderful website I want to be all in on indexing. The problem is that it seems to be working out and we seem to be moving into more of a defensive posture market wise.
VDIGX only holds 43 stocks, but it has a very low expense ratio for an actively managed fund.
I feel like staying this particular course for a few more years. I am 53 and about 5 years before I could retire from local govt. job with a solid pension. Wife is an educator with similar situation (she has $180,000 in 403b fidelity 500 index). We probably won't even tap our 457/403b money until RMD's. Should I move the money into the 500 index, Vanguard Balanced index (VBIAX), or stand pat?
To the question bolded above:
  • Have you considered a total U.S. stock market fund or a total world stock market fund instead of just investing in the S&P 500?

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JoMoney
Posts: 6331
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Re: Dividend Growth Fund VDIGX

Post by JoMoney » Thu Nov 15, 2018 11:42 am

Hard to say.
I'm personally a fan of the 500 index fund, that's what I use... But I also am extremely adverse to the idea of making portfolio changes, especially ones that are moving from a less risky to more risky position.

I do think the Dividend Growth fund follows a style that is slightly less risky. The historical 'standard deviation' has been lower... slightly... and the fund has had slightly lower returns (at least over the past 10 year period compared to S&P 500).
On the other hand, VDIGX is an actively managed fund, which brings with it additional risks that the manager continues the style, and that the style itself continues to act as expected.
There's also pundits out there who are saying that 'Quality' is over-priced (but people are saying the entire market is over priced, so it's hard to gauge if this is considered even more so).

Bottom line though, these are both stock funds that are both quite risky relative to bonds, and I wouldn't consider holding either of them as really being a "defensive posture". A defensive posture would be moving more to cash or bonds.
I have no idea what the relative future returns will be between these two funds, and I don't believe anyone else can tell you either. My instinct, based on prior experience, is that whichever way you go, the other will have higher returns. So whatever you decide, try to go with the one you'll have less regret with even if it doesn't work out as well as something else, for me that's the broad market index fund.
"To achieve satisfactory investment results is easier than most people realize; to achieve superior results is harder than it looks." - Benjamin Graham

Miriam2
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Joined: Fri Nov 14, 2014 11:51 am

Re: Dividend Growth Fund VDIGX

Post by Miriam2 » Thu Nov 15, 2018 11:16 pm

Vikingfan wrote: . . . A year ago I moved the $200,000 in my deferred comp account (457) from the 500 index to VDIGX. After reading a couple of Jack's books and discovering this wonderful website I want to be all in on indexing. The problem is that it seems to be working out and we seem to be moving into more of a defensive posture market wise. I feel like staying this particular course for a few more years. I am 53 and about 5 years before I could retire from local govt. job with a solid pension. Wife is an educator with similar situation (she has $180,000 in 403b fidelity 500 index). We probably won't even tap our 457/403b money until RMD's. Should I move the money into the 500 index, Vanguard Balanced index (VBIAX), or stand pat?
What will you do - what does your IPS say - if next year, 4 years out from retirement, there is a bad bear market that lasts for several years, downsizing your Vg Dividend Growth balance?

TropikThunder
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Joined: Sun Apr 03, 2016 5:41 pm

Re: Dividend Growth Fund VDIGX

Post by TropikThunder » Thu Nov 15, 2018 11:23 pm

mtmingus wrote:
Thu Nov 15, 2018 11:33 am
VDIGX is one of only a few actively managed funds for me. Now it’s closed. It has been doing well for us in the last a few years. I will keep it.
It's actually underperformed vs Total Stock Market (VTSAX for example) in the "last few years" so I'm not sure what you're seeing (10.91% CAGR for VDIGX vs 12.56% CAGR for VTSAX since Jan 2016). VDIGX may have outperformed in the past, but not in the last 10 years or so.

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Vikingfan
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Joined: Thu Nov 15, 2018 9:01 am

Re: Dividend Growth Fund VDIGX

Post by Vikingfan » Fri Nov 16, 2018 8:32 am

VDIGX has outperformed the 500 for the past year. That is fortuitous but is not my aim. I am not looking for outperformance but more downside protection. That said I believe in the indexing philosophy it just seems that in this period of uncertainty it may be better to stay in a slightly value tilted fund than the 500. VBIAX (Vanguard Balanced index) is also one of my options (my 457 has limited palatable options) I have available that may fit the bill.

PFInterest
Posts: 2684
Joined: Sun Jan 08, 2017 12:25 pm

Re: Dividend Growth Fund VDIGX

Post by PFInterest » Fri Nov 16, 2018 9:24 am

Vikingfan wrote:
Fri Nov 16, 2018 8:32 am
VDIGX has outperformed the 500 for the past year. That is fortuitous but is not my aim. I am not looking for outperformance but more downside protection. That said I believe in the indexing philosophy it just seems that in this period of uncertainty it may be better to stay in a slightly value tilted fund than the 500. VBIAX (Vanguard Balanced index) is also one of my options (my 457 has limited palatable options) I have available that may fit the bill.
if your AA is too risky, then adding more fixed income will be your downside protection.

JBTX
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Joined: Wed Jul 26, 2017 12:46 pm

Re: Dividend Growth Fund VDIGX

Post by JBTX » Fri Nov 16, 2018 11:00 am

Vikingfan wrote:
Fri Nov 16, 2018 8:32 am
VDIGX has outperformed the 500 for the past year. That is fortuitous but is not my aim. I am not looking for outperformance but more downside protection. That said I believe in the indexing philosophy it just seems that in this period of uncertainty it may be better to stay in a slightly value tilted fund than the 500. VBIAX (Vanguard Balanced index) is also one of my options (my 457 has limited palatable options) I have available that may fit the bill.
Going back and forth between Dividend growth and S&P 500 isn't really a huge change. Dividend growth is one of my biggest holdings. I too got into it years ago for its defensive characteristics. It has an above average allocation to "quality" companies. It probably doesn't grow quite as fast in up markets, and probably doesn't drop as much in most down markets. But realistically, the difference is probably modest. And as others have said, the valuations of quality companies has increased, so at some point its defensive characteristics may be negated. It could run into a "nifty fifty" affect experienced decades ago. I'm not selling it, but not increasing it either.

togb
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Joined: Mon Oct 23, 2017 8:36 pm

Re: Dividend Growth Fund VDIGX

Post by togb » Fri Nov 16, 2018 9:47 pm

I hold VDIGX in two accounts-- which meant I wanted it back enough to pay a fees to buy it for each of those accounts. I really like this fund. The ER is very low for actively managed and I've reinvested all the dividends to grow my positions. Things could change, but I see this as a long term hold.

If you are feeling that your portfolio has too much risk then work on your investment philosophy and proceed accordingly. But if overall you want less risk you probably should be looking at more bonds or fixed income, not swapping among equity funds.

I am not crazy about the volatility, but it sure doesn't keep me up at night. That's because I have about 3 years worth of expenses in fixed income/bonds that are not earning much-- but I best my downside is less than 10%. And I'm still working. But I like knowing that if something happened to my employement, and the market was in a downward mood, I can wait things out. That's why I still sleep at night. For me, switching from VDIGX to total market stock would not accomplish that purpose. Of course your situation could be different, but thought I'd mention this for your consideration.

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