Your Favorite Vanguard Fund

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sapphire96
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Your Favorite Vanguard Fund

Post by sapphire96 » Sat Jun 24, 2017 6:55 pm

If you had to pick a favorite Vanguard fund to invest in, what would it be?

I can tell you mine would be Vanguard's Wellesley Fund -- very steady and reliable returns.

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TimeRunner
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Re: Your Favorite Vanguard Fund

Post by TimeRunner » Sat Jun 24, 2017 7:00 pm

Vanguard Total World Stock ETF (VT): https://personal.vanguard.com/us/funds/ ... IntExt=INT

The ultimate Boglehead holding - own an approximation of the investable World in one stock. Set it and forget it.
One cannot enlighten the unconscious.

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Re: Your Favorite Vanguard Fund

Post by dbr » Sat Jun 24, 2017 7:06 pm

Isn't that like asking what is your favorite tool? I tend to use screwdrivers to drive screws, hammers to hammer nails, drills to drill holes and so on. I guess as favorites go I do like to assemble things with screws more than with nails, so screwdrivers and drills to make pilot holes are probably more favorite than hammers. Then again, I also like bolting things together which means drilling holes and I really like my ratchet wrench for tightening nuts, but there is no screwdriver involved.

tanstaafl
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Re: Your Favorite Vanguard Fund

Post by tanstaafl » Sat Jun 24, 2017 7:12 pm

To hijack dbr's analogy: I like their multitools - the Lifestrategy family. Sure, each component may be used separately to do its job more precisely, but having them all in one saves my back from lugging a tool belt around.

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Re: Your Favorite Vanguard Fund

Post by montanagirl » Sat Jun 24, 2017 7:43 pm

I like Balanced index. I'd like move everything to for my rmd a couple years hence.

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Re: Your Favorite Vanguard Fund

Post by jhfenton » Sat Jun 24, 2017 7:48 pm

VSS: Vanguard FTSE All-World ex-US Small Cap. It's basically "Total International Small Cap" (and I think that would be a better name). If you made me put everything in one equity fund, that would be it. As it is, it is still my largest holding.

I do, though, wish it came with Admiral Shares. As it is, I keep tiny amounts (~$3,000 each in two accounts). in the Investor Shares (VFSVX) for purchases, since VSS most often trades at a premium. I periodically call and convert chunks of VFSVX to VSS.

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Re: Your Favorite Vanguard Fund

Post by jjface » Sat Jun 24, 2017 9:12 pm

Vanguard Wellington. Wellesley is great too.

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Re: Your Favorite Vanguard Fund

Post by gregchesney » Sat Jun 24, 2017 10:24 pm


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oldzey
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Re: Your Favorite Vanguard Fund

Post by oldzey » Sat Jun 24, 2017 10:43 pm

Vanguard Total Stock Market Index Fund Admiral Shares: VTSAX
"The broker said the stock was 'poised to move.' Silly me, I thought he meant up." ― Randy Thurman

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Re: Your Favorite Vanguard Fund

Post by HAL 9000 » Sun Jun 25, 2017 12:03 am

I like the V500 for funds and vicegrips for tools...

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Re: Your Favorite Vanguard Fund

Post by Vanguard Fan 1367 » Sun Jun 25, 2017 6:37 am

oldzey wrote:Vanguard Total Stock Market Index Fund Admiral Shares: VTSAX
I agree. I just listened to John Bogle's Common Sense on Mutual Fund Investing and he speaks highly of this fund. If John says it, I believe it, and that settles it for me. :happy

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Re: Your Favorite Vanguard Fund

Post by AgentHoopla » Sun Jun 25, 2017 6:41 am

........
Last edited by AgentHoopla on Sun Jun 03, 2018 4:19 pm, edited 1 time in total.

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Re: Your Favorite Vanguard Fund

Post by lostdog » Sun Jun 25, 2017 8:11 am

TimeRunner wrote:Vanguard Total World Stock ETF (VT): https://personal.vanguard.com/us/funds/ ... IntExt=INT

The ultimate Boglehead holding - own an approximation of the investable World in one stock. Set it and forget it.
+1
:sharebeer

I own the mutual index fund version. Looking forward to admiral shares someday.
Total World Stock and Total World Bond. The simple two fund diversified portfolio. "Simplicity is the master key to financial success."

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Re: Your Favorite Vanguard Fund

Post by Eric76 » Sun Jun 25, 2017 8:58 am

Life Strategy Growth. 80/20 set it and forget it. I'm also a big fan of High Yield Corporate Admiral. Unbeatable fees for exposure to conservative end of junk bonds.

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SpringMan
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Re: Your Favorite Vanguard Fund

Post by SpringMan » Sun Jun 25, 2017 9:01 am

Many good Vanguard funds are available but to name some not mentioned already, any managed by PRIMECAP (VHCOX, VPMCX, VPCCX). These are still open to Flagship clients but VHCOX and VPMCX are limited to $25k per year which make it harder to get admiral shares. VPCCX has no admiral shares and no $25k limit. Another favorite is Dividend Growth fund which is closed to all but existing holders (VDIGX). Also a great fund is Vanguard Equity Income (VEIRX). Of course, Bogleheads will name index funds/ETFs but these are readily available at other firms. Vanguard offers low cost actively managed funds.
Best Wishes, SpringMan

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Re: Your Favorite Vanguard Fund

Post by Malinois000 » Sun Jun 25, 2017 9:09 am

VB Small Cap for me. I've owned since 2009...865 shares with a basis of $56..it's $135 today. Love VB!!

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Re: Your Favorite Vanguard Fund

Post by 3wood » Sun Jun 25, 2017 9:18 am

Vanguard Target Date 2035. Simplicity at it's best. :happy

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Re: Your Favorite Vanguard Fund

Post by dbr » Sun Jun 25, 2017 9:31 am

Malinois000 wrote:VB Small Cap for me. I've owned since 2009...865 shares with a basis of $56..it's $135 today. Love VB!!
The ten year returns of the Vanguard stock ETFs that have a ten year history range from 5.42% to 8.71% The 8.71% was large cap growth. I guess I am puzzled why VB at 7.44% would stand out. The 5.42% was large cap value.

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Re: Your Favorite Vanguard Fund

Post by KyleAAA » Sun Jun 25, 2017 9:46 am

I dunno, maybe VIOV? Or VTI. They all do their jobs.

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Re: Your Favorite Vanguard Fund

Post by investor » Sun Jun 25, 2017 11:50 am

WELLINGTON... been 'lucky' for 87 years :D

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Re: Your Favorite Vanguard Fund

Post by dickyboy » Sun Jun 25, 2017 1:43 pm

The Vanguard Healtcare Fund has been VERY VERY good to me over the years. With the advancing age of all the baby boomers, I'm going to keep a good chunk in there regardless of what the government does with regulations.

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Re: Your Favorite Vanguard Fund

Post by mickeyd » Sun Jun 25, 2017 3:37 pm

TSM...
Part-Owner of Texas | | “The CMH-the Cost Matters Hypothesis -is all that is needed to explain why indexing must and will work… Yes, it is that simple.” John C. Bogle

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Re: Your Favorite Vanguard Fund

Post by rattlenap » Sun Jun 25, 2017 4:12 pm

Vanguard Balanced Index Fund for me.

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Wellington

Post by jimb_fromATL » Sun Jun 25, 2017 4:19 pm

I've lost track of the number of times I've seen posters on talk forums and writers for newsletters, magazines, websites etc. sing the praises of their pet sometimes incredibly complex and active portfolios, which upon actual fact checks have turned out not to perform as well in the long run as Vanguard's Wellington fund -- VWELX.

...and a lot of 'em fail to outperform the S&P 500 fund VFINX, too.

jimb

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Re: Your Favorite Vanguard Fund

Post by jimb_fromATL » Sun Jun 25, 2017 4:39 pm

I happen to have yearly performance data for a lot of the funds above, from previous discussions here and on other forums. This is through 2016.

I include results for DCA (Dollar Cost Averaging) for periodic investments because I think the "growth of $10,000" summaries on the brokerage websites do not really represent the way most people invest, and can really skew the results depending on whether there was a really good or bad year at the beginning of the period.

CAGR (Compound Annual Growth Rate) or APY for a single lump sum, and APY for DCA (Dollar Cost Averaging) with annual contributions:
  • VG Wellesley: For 46 years from 1971 through 2016 VWINX has had a CAGR of 9.796% for a lump sum. The APY for DCA with annual contributions has been 9.822%. For the last 15 years the lump CAGR has been 6.867% and DCA contributions have averaged an APY of 7.063%.

    VG Wellington: For 50 years from 1967 through 2016 VWELX has had a CAGR of 9.509% for a lump sum. The APY for DCA with annual contributions has been 10.247%. For the last 15 years the lump CAGR has been 7.572% and DCA contributions have averaged an APY of 8.142%.

    VG Star fund: For 31 years from 1986 through 2016 VGSTX has had a CAGR of 9.083% for a lump sum. The APY for DCA with annual contributions has been 8.38%. For the last 15 years the lump CAGR has been 6.419% and DCA contributions have averaged an APY of 6.847%.

    Vanguard Total Stock Mkt Idx Adm (VTSAX): For 16 years from 2001 through 2016 VTSAX has had a CAGR of 6.076% for a lump sum. The APY for DCA with annual contributions has been 8.754%. For the last 15 years the lump CAGR has been 7.315% and DCA contributions have averaged an APY of 9.204%.

    Vanguard Total Stock Mkt Idx Inv: For 24 years from 1993 through 2016 VTSMX has had a CAGR of 9.166% for a lump sum. The APY for DCA with annual contributions has been 8.386%. For the last 15 years the lump CAGR has been 7.212% and DCA contributions have averaged an APY of 9.092%.

    Vanguard Total Intl Stock Index Inv: For 20 years from 1997 through 2016 VGTSX has had a CAGR of 4.277% for a lump sum. The APY for DCA with annual contributions has been 4.137%. For the last 15 years the lump CAGR has been 5.714% and DCA contributions have averaged an APY of 4.33%.

    Vanguard Total Stock Mkt Idx Inv: For 24 years from 1993 through 2016 VTSMX has had a CAGR of 9.166% for a lump sum. The APY for DCA with annual contributions has been 8.386%. For the last 15 years the lump CAGR has been 7.212% and DCA contributions have averaged an APY of 9.092%.

    Vanguard LifeStrategy Growth Inv (VASGX): For 22 years from 1995 through 2016 VASGX has had a CAGR of 7.905% for a lump sum. The APY for DCA with annual contributions has been 6.437%. For the last 15 years the lump CAGR has been 5.958% and DCA contributions have averaged an APY of 6.658%.

    Vanguard Capital Opportunity Inv (VHCOX): For 19 years from 1998 through 2016 VHCOX has had a CAGR of 13.441% for a lump sum. The APY for DCA with annual contributions has been 11.411%. For the last 15 years the lump CAGR has been 9.583% and DCA contributions have averaged an APY of 11.304%.

    VG PRIMECAP Inv: For 31 years from 1986 through 2016 VPMCX has had a CAGR of 12.645% for a lump sum. The APY for DCA with annual contributions has been 12.212%. For the last 15 years the lump CAGR has been 9.014% and DCA contributions have averaged an APY of 10.865%.

    Vanguard PRIMECAP Core Inv : For 12 years from 2005 through 2016 VPCCX has had a CAGR of 9.726% for a lump sum. The APY for DCA with annual contributions has been 11.328%. For the last 12 years the lump CAGR has been 9.726% and DCA contributions have averaged an APY of 11.328%.

    Vanguard Dividend Growth Inv: For 24 years from 1993 through 2016 VDIGX has had a CAGR of 7.835% for a lump sum. The APY for DCA with annual contributions has been 7.736%. For the last 15 years the lump CAGR has been 7.381% and DCA contributions have averaged an APY of 9.188%.

    Vanguard Equity-Income Fund: For 28 years from 1989 through 2016 VEIPX has had a CAGR of 10.047% for a lump sum. The APY for DCA with annual contributions has been 9.492%. For the last 15 years the lump CAGR has been 7.805% and DCA contributions have averaged an APY of 9.421%.

    Vanguard Health Care Inv (VGHCX): For 32 years from 1985 through 2016 VGHCX has had a CAGR of 16.473% for a lump sum. The APY for DCA with annual contributions has been 15.23%. For the last 15 years the lump CAGR has been 9.972% and DCA contributions have averaged an APY of 11.373%.

    Vanguard Balanced Index Inv (VBINX): For 24 years from 1993 through 2016 VBINX has had a CAGR of 7.93% for a lump sum. The APY for DCA with annual contributions has been 7.229%. For the last 15 years the lump CAGR has been 6.383% and DCA contributions have averaged an APY of 7.246%.
jimb

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Re: Your Favorite Vanguard Fund

Post by snarlyjack » Sun Jun 25, 2017 4:47 pm

Vanguard High Dividend Yield Index Fund (vhdyx).
It's a great large Cap value fund.

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Re: Your Favorite Vanguard Fund

Post by jimb_fromATL » Sun Jun 25, 2017 5:25 pm

snarlyjack wrote:Vanguard High Dividend Yield Index Fund (vhdyx).
It's a great large Cap value fund.
Wow. That relative newcomer has performed so closely to the S&P 500 and total stock market during its lifetime that it's hard to see the difference on a graph. And in real life, just a few days difference in when you start and make periodic contributions would probably put one fund a little behind or ahead of the other.

portfolioVisualizer

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Re: Your Favorite Vanguard Fund

Post by NibbanaBanana » Sun Jun 25, 2017 6:26 pm

jimb_fromATL wrote:I happen to have yearly performance data for a lot of the funds above, from previous discussions here and on other forums. This is through 2016.
jimb
Thanks jimb. That was a great post. I'm surprised to see that lump sum and DCA didn't really make much of a difference.

Favorites for me: Probably a tie between Wellington and STAR.

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Re: Your Favorite Vanguard Fund

Post by snarlyjack » Sun Jun 25, 2017 6:58 pm

Jimb,

It's a sweet fund, Vanguard High Dividend Yield Index Fund (VHDYX).
Large Cap. value fund, 420 Large Cap Stocks.

***(Different Philosophy)... (Dividend Paying Philosophy) (Value Stocks Philosophy)***

Dividend Yield:
Vanguard High Dividend Yield Index Fund (VHDYX) 3.03%
Vanguard Total Stock Market Index Fund (VSTAX) 1.87%
Vanguard S & P 500 Fund (VFIBX) 1.97%

$100,000 x 3.03% = $3030. dividend (VHDYX)
$100,000 x 1.87% = $1870. dividend (VSTAX)
$100,000 x 1.97% = $1970. dividend (VFIBX)

"That relative newcomer has performed so closely to the S & P and Total Stock Market during its lifetime
that it's hard to see the difference on a graph." :)

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Re: Your Favorite Vanguard Fund

Post by jimb_fromATL » Sun Jun 25, 2017 7:13 pm

NibbanaBanana wrote: Thanks jimb. That was a great post. I'm surprised to see that lump sum and DCA didn't really make much of a difference.


Bear in mind that those results are not comparing lump sum versus dollar-cost averaging in the same fund for the same amount of money over a short period of time -- like is being discussed this thread

What these reports do show is the "growth of $10K" lump sum reports from brokerage websites doesn't necessarily tell you
which fund has in the past -- and might in the future -- give you the most for your periodic contributions to retirement over the years.

So ... you need to compare the lump sum CAGR for each fund to the other, or the DCA APY for each fund to another fund, depending on whether you're investing a lump sum you already have, such as a windfall, inheritance, settlement, sale of a house or other asset, etc., or else will be contributing periodically like you'd do in a retirement fund.

(Especially for 401(k)-type plans, the results for monthly contributions could be more meaningful than they yearly performance, too. But the longer the total time, the less the difference between a monthly or yearly contribution.)

Incidentally about the only website I know of that lets you compare funds or portfolios with monthly or yearly contributions or withdrawals is Portfolio Visualizer. A minor problem IMO is that it appears to add the contribution at the end of the start and end months or years, not the beginning. Still, the longer the time span, the less difference it makes, and the more accurate it will be for most retirement funds compared to "growth of $10K".


jimb

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Re: Your Favorite Vanguard Fund

Post by student » Sun Jun 25, 2017 7:17 pm

S&P 500 and Total Market. I like STAR fund too.

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Re: Your Favorite Vanguard Fund

Post by TD2626 » Sun Jun 25, 2017 7:33 pm

My personal favorite is Vanguard Total World Admiral. Unfortunately, it does not exist (as of June 2017).

In terms of funds that actually exist, I think that one could easily most defend the following choices in terms of favorite Vanguard funds:

Index Funds:
Vanguard S&P 500 Index (any share class) - the one that really started indexing
Vanguard Total US - Broad diversification and easy utility for many today
Vanguard Total International Index - A broadly diversified international holding
Vanguard Total World Index Fund Investor Shares - A possible, but expensive, option for those who like global cap weighting
Vanguard Total Bond -Sometimes we concentrate too much on stock funds - but forget about the bond index funds. A very broad bond fund.

Active Funds:
Vanguard Wellington - Ancient, with a track record stretching back to the 1920s. Such history!
Vanguard Wellesly - Venerable, fairly old, conservative fund. (Nice suggestion, OP).
Vanguard STAR - Interesting strategy as a fund of funds with a low minimum
Vanguard Windsor - historic, long track record

Notes: The list does not reflect any considerations on whether an included fund is a good idea today. For example, S&P 500 Index is there because of the history of being the first index fund at Vanguard, even though it's been superseded for many by Total US. Also, just because a fund is ancient doesn't make it good -- the (non-Vanguard) Massachusetts Investors Trust is ancient but has a very high expense ration.

It's interesting how many of the index funds are "Total" funds. Also, from looking at the active funds, it's impressive how long a track record many of them have. Some of the funds have been staying the course for many, many decades.

I don't think that sector funds, or niche funds like Emerging Market Government Bond, should be enshrined in a list of favorites. Indeed, these are more speculative plays and/or things only suitable for very small allocations and they represent a straying from Vanguard's core strategies.

There are also definitely some that would qualify as least favorite for some around here - such as Vanguard's Managed Payout, Market Neutral, or Alternative Strategies funds. Very odd things going on in those funds. Not saying that I couldn't think of a situation where someone would find them useful - but certainly very unconventional and high risk. Also, the Vanguard Emerging Markets Select Stock (VMMSX) has an expense ratio of 0.90%, which is very, very high for Vanguard and for most forum members. (Yes, I went and sorted Vanguard's list of funds by "expense ratio: High to Low").

A plausible answer to "what is Vanguard's list of favorite Vanguard funds", at least as determined by some random committee at somewhere, are the "select funds" https://investor.vanguard.com/mutual-fu ... nd-returns

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Re: Your Favorite Vanguard Fund

Post by Helo80 » Sun Jun 25, 2017 7:54 pm

Vanguard Total Universe (includes emerging star systems and planets) is my number one pick, followed closely by VFIAX - S&P 500

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Re: Your Favorite Vanguard Fund

Post by jimb_fromATL » Sun Jun 25, 2017 7:59 pm

Helo80 wrote:Vanguard Total Universe (includes emerging star systems and planets) is my number one pick,
Seems like currency exchange rates would be a major problem, and fund transfer and admin fees would make it prohibitively expensive. And we don't have exchange and commerce agreements with all that many other planets and star systems anyway.

jimb

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Re: Your Favorite Vanguard Fund

Post by core4portfolio » Sun Jun 25, 2017 8:16 pm

If its just one then VTSAX
If its 2 then VTSAX and 2045 Target retirement fund VTIVX
Allocation : 80/20 (80% TSM, 20% TBM) | Need to learn fishing sooner

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Re: Your Favorite Vanguard Fund

Post by venkman » Sun Jun 25, 2017 11:10 pm

Helo80 wrote:Vanguard Total Universe (includes emerging star systems and planets) is my number one pick, followed closely by VFIAX - S&P 500
It turns out Small Cap Growth isn't the only "black hole of investing".... :D

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Re: Your Favorite Vanguard Fund

Post by stimulacra » Sun Jun 25, 2017 11:44 pm

“A warrior should not have a favorite sword”
~ Miyamoto Musashi

If you read Musashi's “A Book of Five Rings” there's numerous stories of swordsmen who make the deadly mistake of relying on a favorite weapon or trying to replicate a previous success during a sword fight.

I don't think investing is as unforgiving as a sword fight but the whole zig when others are zagging strategy does translate over well to investing (for me).

At the moment my favorite Vanguard funds are whichever one is underperforming, right now it's Vanguard Intermediate Corporate Bond (VICSX)

On the other hand, if by favorite you mean which fund has the most money invested, it would be Total Bond (VBTLX)

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Re: Your Favorite Vanguard Fund

Post by Longtermgrowth » Mon Jun 26, 2017 1:56 am

stimulacra wrote:“A warrior should not have a favorite sword”
~ Miyamoto Musashi

If you read Musashi's “A Book of Five Rings” there's numerous stories of swordsmen who make the deadly mistake of relying on a favorite weapon or trying to replicate a previous success during a sword fight.

I don't think investing is as unforgiving as a sword fight but the whole zig when others are zagging strategy does translate over well to investing (for me).

At the moment my favorite Vanguard funds are whichever one is underperforming, right now it's Vanguard Intermediate Corporate Bond (VICSX)

On the other hand, if by favorite you mean which fund has the most money invested, it would be Total Bond (VBTLX)
Hey, this makes me feel a little better about having 7 stock ETFs in taxable. Out of the Vanguard ETFs I hold, VYM (Vanguard High Dividend Yield ETF) is right on top, closely followed by VXUS (Vanguard Total International Stock ETF), along with VTI (Vanguard Total Stock Market ETF). Can get any ETF commission free, so I've gone a bit wild with some WisdomTree smallcap funds (wouldn't hold these if it wasn't for Larry Swedroe's posts) and a Schwab fund (SCHD) that has some quality screens I feel complement VYM.

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Re: Your Favorite Vanguard Fund

Post by iamlucky13 » Mon Jun 26, 2017 6:30 am

I've never been a fan of "best of" threads. At least this one is "favorite" instead, which better recognizes there's range of investment goals, methods, and timelines.

I also am not really a fan of the "what's your favorite" question, since there's always so many different qualities to compare.

That said, Total Stock Market (VTSAX) has the largest share of my investments.

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Re: Your Favorite Vanguard Fund

Post by Nowizard » Mon Jun 26, 2017 8:29 am

Health Care in the past was VERY strong for us, and it continues to be reflected by a tilt in our portfolio.

Tim

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Re: Your Favorite Vanguard Fund

Post by indexonlyplease » Mon Jun 26, 2017 9:00 am

tanstaafl wrote:To hijack dbr's analogy: I like their multitools - the Lifestrategy family. Sure, each component may be used separately to do its job more precisely, but having them all in one saves my back from lugging a tool belt around.

Now I like that. Great analogy.

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Re: Your Favorite Vanguard Fund

Post by bottlecap » Mon Jun 26, 2017 9:11 am

I make it a point not to get emotionally attached to assets.

JT

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Re: Your Favorite Vanguard Fund

Post by indexonlyplease » Mon Jun 26, 2017 9:15 am

jimb_fromATL wrote:
Helo80 wrote:Vanguard Total Universe (includes emerging star systems and planets) is my number one pick,
Seems like currency exchange rates would be a major problem, and fund transfer and admin fees would make it prohibitively expensive. And we don't have exchange and commerce agreements with all that many other planets and star systems anyway.

jimb
jimb

So if I am reading this correct, you state someone would be better off doing the lump sum every January in The Roth IRA Total Stock Market Fund then monthly. Big difference on the returns.

I wounder does it make a differnces if someone invested in the peak of the market. In stead of DCA monthly like most do I think.

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Re: Your Favorite Vanguard Fund

Post by dbr » Mon Jun 26, 2017 9:29 am

indexonlyplease wrote:
jimb_fromATL wrote:
Helo80 wrote:Vanguard Total Universe (includes emerging star systems and planets) is my number one pick,
Seems like currency exchange rates would be a major problem, and fund transfer and admin fees would make it prohibitively expensive. And we don't have exchange and commerce agreements with all that many other planets and star systems anyway.

jimb
jimb

So if I am reading this correct, you state someone would be better off doing the lump sum every January in The Roth IRA Total Stock Market Fund then monthly. Big difference on the returns.

I wounder does it make a differnces if someone invested in the peak of the market. In stead of DCA monthly like most do I think.
Not a big difference. On average you get ahead by being invested effectively six months longer on that amount of money. But that does not mean you save the money up for a year and then invest it on the following January. That would have the opposite effect. This lump sum thing only applies if you somehow acquire a lump sum, which is not a usual event.

Investing at the peak of the market is a hypothetical that is hard to define as the market has many peaks relative to some part of its history that are not peaks at all relative to another part of the history. I would have to think hard to figure out what sort of algorithm one would design to define and detect a peak in the market, and if one did have such a thing I doubt it would be usable.

indexonlyplease
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Re: Your Favorite Vanguard Fund

Post by indexonlyplease » Mon Jun 26, 2017 9:34 am

dbr

Thanks

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jimb_fromATL
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Re: Your Favorite Vanguard Fund

Post by jimb_fromATL » Mon Jun 26, 2017 10:12 am

indexonlyplease wrote: So if I am reading this correct, you state someone would be better off doing the lump sum every January in The Roth IRA Total Stock Market Fund then monthly. Big difference on the returns.

I wounder does it make a differnces if someone invested in the peak of the market. In stead of DCA monthly like most do I think.
The lump sum and DCA results for long terms in my reports above are not related to whether DCA or lump sum investing is better for short periods.

That is covered in the discussion in this thread where we discuss statistics that when you already have a lump sum you'll come out better about 2/3 of the time by investing it immediately instead of holding it to invest a little at a time over the next several months or year.

In my reports in this thread, I show the gain for a lump sum because that's the way Morningstar and other sites -- including the brokerages -- show the gain on a fund, even though IMO it not always accurate for people who invest in 401(k)s and IRAs on a periodic basis for many years.

For example in my report above:

Vanguard Total Stock Mkt Idx Inv: For 24 years from 1993 through 2016 VTSMX has had a CAGR of 9.166% for a lump sum.

You would use this to compare investing a lump sum in VTSMX to other funds. Not to compare lump sum versus DCA in the same fund.

The APY for DCA with annual contributions has been 8.386%.

You would use this to compare with other funds if you were investing periodically -- like to a 401(k) or IRA over many years, instead of just investing a single lump sum and nothing else for a couple or three decades.

You also need to compare funds for the same start and end dates. In the case of a lump sum, the end result can be substantially different depending on whether you invest at a peak or a valley. You stand to lose a lot more if a big lump sum drops immediately after you invest it. On the other hand, you would earn a lot more if you could time it so you invest the large lump sum at the bottom and get the gain on all of it.

With DCA, you won't lose as much if it drops right after you start investing at a peak because you don't have as much money in the account. But that's a trade-off because with DCA you don't have as money in the account to reap a gain if you happen to start investing at what turns out to be a low point.

The longer the number of years, the less difference the timing will affect the end result ... especially when you're continually contributing new money.

As mentioned the other thread, for periods of about a year, investing a lump sum instead of spreading it out works better about 2/3 of the time. The longer the number of periods, the less difference it makes overall.

So ... unless you have a crystal ball that is very accurate, your best bet is to invest as much as you can as soon as you can. That will be DCA with 401(k)s because you invest it as you earn it anyway. And with IRAs, you'll be better off by investing the lump sum at the beginning of the year, or investing it as you accumulate it instead of keeping it under the mattress or in a savings account to invest a little at a time.

An exception for IRAs is when your income varies and/or you may receive bonuses or a raise that might cause you to go over the limit for contributions to an IRA for the year, or which might change your tax bracket to make a tax-deferred or Roth IRA a better bet for the long term.

You have until April 15th tax deadline next year to invest in an IRA for this year. That gives you time to decide which would give the best tax advantage for this year if your have more income or bonuses near the end of this year, too.

jimb

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SeeMoe
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Re: Your Favorite Vanguard Fund

Post by SeeMoe » Mon Jun 26, 2017 1:27 pm

I was drawn to funds with interesting names such as Windsor and Wellington back in the day without knowing their mechanics. Later I began looking at funds in a different light and the Equity Income fund served my IRA well for many years during the accumulation period. Now the IRA's are 100% bond funds and doing well what with RMD's one time a year. Another fund that also catches the large and mid caps is the Tax Managed Capital Appreciation fund that is our core stock fund now. (Total Bond Index is the core bond fund.)

SeeMoe.. :moneybag
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WhiteMaxima
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Re: Your Favorite Vanguard Fund

Post by WhiteMaxima » Mon Jun 26, 2017 1:31 pm

Vanguard Health Fund. Because I invest not just for the return of money but also for my health.

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Sandtrap
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Re: Your Favorite Vanguard Fund

Post by Sandtrap » Mon Jun 26, 2017 2:44 pm

wellesley income fund :D
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BHUser27
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Re: Your Favorite Vanguard Fund

Post by BHUser27 » Mon Jun 26, 2017 2:51 pm

Question is over simplified (IMO).
Here is the closest answer I am comfortable with...

Favorite (in tax advantaged Roth IRA) = Wellesley Admiral (VWIAX)
Favorite (in taxable account) = Total Stock Mkt Index Admiral (VTSAX) + Interm Tax-Exempt Bond (VWIUX)

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