Vanguard U.S. Growth: Give me a reason

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Idahusker
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Vanguard U.S. Growth: Give me a reason

Post by Idahusker »

Hi.

I'm currently sitting on just over 1,500 shares of the flovely Vanguard U.S. Growth fund, which is one of the more boneheaded -- OK, the most boneheaded -- investment I've ever made. :roll:
I purchased them over a period of a few years in the late '90s/early '00s through automatic paycheck deduction. I'm currently the proud owner of an unrealized gain/loss of –$14,969.

Can someone give me a reason not to sell this turkey off and start writing off that $3,000 loss a year for the next five years? I really hate looking at this fund.

Thanks for your thoughts.

Your pal, U.S. Growth Boy.
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White Coat Investor
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Re: Vanguard U.S. Growth: Give me a reason

Post by White Coat Investor »

Idahusker wrote:Hi.

I'm currently sitting on just over 1,500 shares of the flovely Vanguard U.S. Growth fund, which is one of the more boneheaded -- OK, the most boneheaded -- investment I've ever made. :roll:
I purchased them over a period of a few years in the late '90s/early '00s through automatic paycheck deduction. I'm currently the proud owner of an unrealized gain/loss of –$14,969.

Can someone give me a reason not to sell this turkey off and start writing off that $3,000 loss a year for the next five years? I really hate looking at this fund.

Thanks for your thoughts.

Your pal, U.S. Growth Boy.
Nope, can't think of one. Even if you turn around and buy it back next week you can still have the tax write-off.
1) Invest you must 2) Time is your friend 3) Impulse is your enemy | 4) Basic arithmetic works 5) Stick to simplicity 6) Stay the course
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nick22
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Take the Loss

Post by nick22 »

Harvesting losses for tax purposes is actually a very useful way to optimize your net (after tax) return. Take the loss and carry forward the $3,000 for each of the next 5 years. You can pick another investment, or as EmergDoc said, buy back the same fund after 30 days. But I would make a new choice.
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mickeyd
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Post by mickeyd »

Wow, what a tale of woe! I feel your pain US Growth Boy.

That is one heck of a loss to take on, but I don't see Growth picking up any momentum in the near future, but I don't know any more that you did 5 years ago. Do you have any increases that you could offset the losses with?

I hope that you get better advice from others on this forum as my advice seems very weak.
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Taylor Larimore
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U.S. Growth

Post by Taylor Larimore »

Hi Ida:
Vanguard U.S. Growth fund, which is one of the more boneheaded -- OK, the most boneheaded -- investment I've ever made.
Don't blame yourself. No one can forecast mutual fund performance.

At the end of 1998 (shortly before you bought it), US Growth was the "darling" of Vanguard investors. It was Vanguard's highest returning diversified stock fund with a 10-year compound return of 584.1%.

No fund grows to the sky. During the 2000-2002 bear market, U.S. Growth suffered a maximum cumulative loss of (-70.6%). At the end of last year it had the worst 5-year returns of any Vanguard stock fund.

What to do?

If a losing fund is in a taxable account (I think your's is) it is almost always a good idea to sell it for the lax-loss benefit before year-end. If you like the fund--buy it back after 30 days. If you don't want the fund anymore--buy another.

Next time consider an index fund. :)

Best wishes.
Taylor
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steve
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You're Not Alone

Post by steve »

In case you think there are a lot of individuals with the same problem, it gets worse: US Growth is also a component of STAR Fund (VGSTX) - it accounts for about 17% (just short of $1 billion) of the investment in US Growth. In my opinion, it's the only real stinker in STAR, which I think is otherwise a great fund (if not a pure index collection).
"No matter where you go, there you are."
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hollowcave2
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the key factor

Post by hollowcave2 »

I think the key factor here is that you really hate looking at the fund in your portfolio. Once you get to that point, I think it's time to sell and move on.

Now, growth funds in general have done poorly over the past few years, but both US Growth and Growth Equity fund both underperformed the respective Growth index. US Growth has had really bad long term returns too.

I had a small position in Growth Equity fund until I saw it (a raise its ER to 0.90% and b) for this increased ER it underperformed the growth index by a wide margin. I guess that says that the managers simply couldn't find a reliable way to get good numbers out of growth stocks.

So I dumped Growth equity recently. It actually was the performance over the past 6 years that made my decision, but the underperformance over the past year was just the last straw.

I wanted to give some managed funds a chance, but this experience plus reading Bogle's latest book at the same time really has made a strong case for index funds.

Steve
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Mel Lindauer
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US Growth

Post by Mel Lindauer »

Hi Idahusker:

When a fund does poorly because that segment of the market is doing poorly, that's one thing, but when the fund underperforms its benchmark for a long period of time, that's a totally different story.

It appears from your post that it's time to take your tax loss and move on. However, if/when you do decide to get rid of this fund, put it behind you and don't worry about what it does in the future.

Regards,

Mel
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Post by livesoft »

Two rules have really helpred me:

1. Look at every investment in the 11th month of owning it. If it is a loser, sell it for the short-term capital loss. You can always buy something else right away.

2. Look at all investments in the months of Nov-Dec. If any lots have a loss, sell them for the tax loss. Buy something else right away.

These robot rules force you to deal with loss aversion. Also, your portfolio looks all black at the beginning of each new year because you have no losers. You also generally convert taxes at your marginal tax rate to your long term cap gains tax rate.

When you buy something else, you can do it the same day you sell. It can't be the same investment, but it can be much the same, such as IYY for VTI or vice versa.

In any portfolio, you will always have the 10% worst (bonehead) investment. You should consider doing something with those worst investments and upgrade your portfolio each year.

Bottom line: sell that Vanguard Growth Equity.
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Met Income
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Re: Vanguard U.S. Growth: Give me a reason

Post by Met Income »

EmergDoc wrote:
Idahusker wrote:Hi.

I'm currently sitting on just over 1,500 shares of the flovely Vanguard U.S. Growth fund, which is one of the more boneheaded -- OK, the most boneheaded -- investment I've ever made. :roll:
I purchased them over a period of a few years in the late '90s/early '00s through automatic paycheck deduction. I'm currently the proud owner of an unrealized gain/loss of –$14,969.

Can someone give me a reason not to sell this turkey off and start writing off that $3,000 loss a year for the next five years? I really hate looking at this fund.

Thanks for your thoughts.

Your pal, U.S. Growth Boy.
Nope, can't think of one. Even if you turn around and buy it back next week you can still have the tax write-off.
Wouldn't you have to wait 30 days for the wash sale rule?
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cfs
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This is what M* wrote about Vanguard US Growth

Post by cfs »

Sad but true, in the past TEN years a regular savings account at my credit union earned more money than this fund. This is what M* said about the fund:
This large-growth offering has arguably been Vanguard's problem child for quite some time. Its performance over the past couple of decades has been spotty at best but generally downright dismal. Likely as a result, the fund has bled assets since the late 1990s when it housed nearly $19 billion. Vanguard hasn't exactly sat still since then: It's made a couple of manager changes over the years, bringing on AllianceBernstein in December 2002 then adding growth boutique William Blair and Company in April 2004 to run a third of the portfolio. While both management teams have decent to good records at their own fund companies, the fund has been unable to string together even couple of good years here so far--especially curious considering the Vanguard fund's superior cost structure. We do expect better things from the fund when high-quality mega-cap stocks are in favor, but as a core growth holding, it needs to remain more competitive when things aren't going its way.
Here is the link to the article

http://news.morningstar.com/article/art ... ?id=182208

cfs
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Idahusker
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Post by Idahusker »

Thanks for the responses, guys.
I'm saying night-night to this dud.

I'll probably just stick the cash in a money market account for now. We're looking at building a house sometime in the near future, and I'm going to need to scrape together every penny I can.
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Idahusker
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Post by Idahusker »

mickeyd wrote:Wow, what a tale of woe! I feel your pain US Growth Boy.

That is one heck of a loss to take on, but I don't see Growth picking up any momentum in the near future, but I don't know any more that you did 5 years ago. Do you have any increases that you could offset the losses with?

I hope that you get better advice from others on this forum as my advice seems very weak.
Well, this is an interesting thought. I do have some increases in my taxable investments -- I have five shares of Berkshire Hathaway B stock that have done well over the past few years, but I wasn't really thinking of selling those anytime soon. I ENJOY looking at BRKB in my portfolio. :D
Gregory
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why not sell?

Post by Gregory »

The psychological benefits of it not staring you in the face each time you review your holdings should be well worth it.

Take the tax loss. It will feel good, I think, as you lop off a bit of owed tax every year, thinking "well, something good is finally coming of that investment."

Greg
Pecuniae imperare oportet, non servire. | Fortuna vitrea est; tum cum splendit frangitur. -Syrus
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Idahusker
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Post by Idahusker »

I just pulled the trigger.
The relief is incredible. AHHHHHHHHHHHHHHHHHHHHHHHHHH.

Stinking Vanguard U.S. Growth.
:evil:
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Re: Vanguard U.S. Growth: Give me a reason

Post by White Coat Investor »

Met Income wrote: Wouldn't you have to wait 30 days for the wash sale rule?
You're right.
1) Invest you must 2) Time is your friend 3) Impulse is your enemy | 4) Basic arithmetic works 5) Stick to simplicity 6) Stay the course
Itster
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Re: Vanguard U.S. Growth: Give me a reason

Post by Itster »

I realize US Growth isn't a Boglehead index fund, but this thread is an interesting read in the context of 11 years later.

https://personal.vanguard.com/us/funds/ ... irect=true
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Re: Vanguard U.S. Growth: Give me a reason

Post by Arizonasun2008 »

Itster wrote: Fri Mar 30, 2018 11:15 pm I realize US Growth isn't a Boglehead index fund, but this thread is an interesting read in the context of 11 years later.

https://personal.vanguard.com/us/funds/ ... irect=true
I’m a newbie here and I looked at this link that you posted and it shows positive returns in years 1,3,5,10 and when I compare it to S&p on graph, they trend together. I realize OP feels much better now after selling this mutual fund - but were the returns that bad? Am I not reading this link correctly? Thanks in advance!
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Re: Vanguard U.S. Growth: Give me a reason

Post by Itster »

Arizonasun2008 wrote: Sat Mar 31, 2018 12:06 am
Itster wrote: Fri Mar 30, 2018 11:15 pm I realize US Growth isn't a Boglehead index fund, but this thread is an interesting read in the context of 11 years later.

https://personal.vanguard.com/us/funds/ ... irect=true
I’m a newbie here and I looked at this link that you posted and it shows positive returns in years 1,3,5,10 and when I compare it to S&p on graph, they trend together. I realize OP feels much better now after selling this mutual fund - but were the returns that bad? Am I not reading this link correctly? Thanks in advance!
Yes, even though it's had a good run since the Great Recession, if you owned this fund during the Tech/Dot-com crash and after, it still hasn't recovered its former glory. And during the GR it dropped to about the level it did after the 2000 crash (after the OP sold). I'm sure the OP sold it and never looked back. But it's certainly done well over the previous 9(ish) years. Looking at the recent historical returns doesn't give you the whole story.
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Re: Vanguard U.S. Growth: Give me a reason

Post by TropikThunder »

Arizonasun2008 wrote: Sat Mar 31, 2018 12:06 am
Itster wrote: Fri Mar 30, 2018 11:15 pm I realize US Growth isn't a Boglehead index fund, but this thread is an interesting read in the context of 11 years later.

https://personal.vanguard.com/us/funds/ ... irect=true
I’m a newbie here and I looked at this link that you posted and it shows positive returns in years 1,3,5,10 and when I compare it to S&p on graph, they trend together. I realize OP feels much better now after selling this mutual fund - but were the returns that bad? Am I not reading this link correctly? Thanks in advance!
The thread started in 2007, and the OP had held VWUSX since ~2000. In that time period, VWUSX significantly lagged the S&P500. CAGR from Jan 2000 to Apr 2007 (when the thread started) was +1.66% for VFINX S&P500 Index vs -7.66% for VWUSX. Yeah, it was that bad.
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Veritas Simplex
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Re: Vanguard U.S. Growth: Give me a reason

Post by Veritas Simplex »

Ah yes, US Growth. It was good before it was bad and it was bad before it was good. I'm old enough to remember both! An abject lesson in active fund investing.
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Re: Vanguard U.S. Growth: Give me a reason

Post by ArmchairArchitect »

Revisiting this old thread because when looking at Vanguard's current lineup and how it's fared during the CCP virus downturn, VWUSX/VWUAX seems to be the best positioned out of all of Vanguard's funds when you look at both short and long-term performance/resiliency (YTD, 1 Year, 5 year, 10 year, and Since Inception at 5.74% 12.89% 13.41% 14.28% 10.62% respectively).

https://investor.vanguard.com/mutual-fu ... nd-returns

Thoughts?
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Re: Vanguard U.S. Growth: Give me a reason

Post by theorist »

ArmchairArchitect wrote: Fri May 08, 2020 11:07 am Revisiting this old thread because when looking at Vanguard's current lineup and how it's fared during the CCP virus downturn, VWUSX/VWUAX seems to be the best positioned out of all of Vanguard's funds when you look at both short and long-term performance/resiliency (YTD, 1 Year, 5 year, 10 year, and Since Inception at 5.74% 12.89% 13.41% 14.28% 10.62% respectively).

https://investor.vanguard.com/mutual-fu ... nd-returns

Thoughts?
Performance chasing is a no no here, but I keep 10% of my taxable equity investments in Vanguard’s growth index VIGAX and I’m wondering if I should’ve gone with this instead! 😈
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Re: Vanguard U.S. Growth: Give me a reason

Post by MotoTrojan »

theorist wrote: Fri May 08, 2020 11:41 am
Performance chasing is a no no here, but I keep 10% of my taxable equity investments in Vanguard’s growth index VIGAX and I’m wondering if I should’ve gone with this instead! 😈
Reading this old post below is quite interesting... you hear the same things these-days about Value.

mickeyd wrote: Sat Apr 07, 2007 8:42 pm
That is one heck of a loss to take on, but I don't see Growth picking up any momentum in the near future, but I don't know any more that you did 5 years ago.
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Re: Vanguard U.S. Growth: Give me a reason

Post by MotoTrojan »

ArmchairArchitect wrote: Fri May 08, 2020 11:07 am Revisiting this old thread because when looking at Vanguard's current lineup and how it's fared during the CCP virus downturn, VWUSX/VWUAX seems to be the best positioned out of all of Vanguard's funds when you look at both short and long-term performance/resiliency (YTD, 1 Year, 5 year, 10 year, and Since Inception at 5.74% 12.89% 13.41% 14.28% 10.62% respectively).

https://investor.vanguard.com/mutual-fu ... nd-returns

Thoughts?
My thought is that people back in this thread's years were talking about how poorly growth has done and how they think that'll continue, and look what happened ever since. This thread and the data you cite above would make me more inclined to go all-in on value (which I already do) than growth.
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Re: Vanguard U.S. Growth: Give me a reason

Post by theorist »

MotoTrojan wrote: Fri May 08, 2020 11:44 am
ArmchairArchitect wrote: Fri May 08, 2020 11:07 am Revisiting this old thread because when looking at Vanguard's current lineup and how it's fared during the CCP virus downturn, VWUSX/VWUAX seems to be the best positioned out of all of Vanguard's funds when you look at both short and long-term performance/resiliency (YTD, 1 Year, 5 year, 10 year, and Since Inception at 5.74% 12.89% 13.41% 14.28% 10.62% respectively).

https://investor.vanguard.com/mutual-fu ... nd-returns

Thoughts?
My thought is that people back in this thread's years were talking about how poorly growth has done and how they think that'll continue, and look what happened ever since. This thread and the data you cite above would make me more inclined to go all-in on value (which I already do) than growth.
Yes, agreed. It is humorous to read how down people were on growth in the era reflected in early posts here!
maj
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Re: Vanguard U.S. Growth: Give me a reason

Post by maj »

You have good thoughts.
The loss is there for the taking.
And good choices for reinvestment such as Large Cap growth or Mega Cap Growth Index--if you want growth.

peace
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Re: Vanguard U.S. Growth: Give me a reason

Post by Kenkat »

Poster boy for measuring the “greater the hate, the better the future prospects” effect of investments that get trashed from time to time here.
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Re: Vanguard U.S. Growth: Give me a reason

Post by Robot Monster »

MotoTrojan wrote: Fri May 08, 2020 11:43 am
theorist wrote: Fri May 08, 2020 11:41 am
Performance chasing is a no no here, but I keep 10% of my taxable equity investments in Vanguard’s growth index VIGAX and I’m wondering if I should’ve gone with this instead! 😈
Reading this old post below is quite interesting... you hear the same things these-days about Value.

mickeyd wrote: Sat Apr 07, 2007 8:42 pm
That is one heck of a loss to take on, but I don't see Growth picking up any momentum in the near future, but I don't know any more that you did 5 years ago.
Makes me think of every "thinking about dumping international stocks for greener pastures thread".
"Happiness comes from being connected in the right ways to: other people, your work, something larger than yourself."
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Re: Vanguard U.S. Growth: Give me a reason

Post by MotoTrojan »

Robot Monster wrote: Fri May 08, 2020 1:35 pm
MotoTrojan wrote: Fri May 08, 2020 11:43 am
theorist wrote: Fri May 08, 2020 11:41 am
Performance chasing is a no no here, but I keep 10% of my taxable equity investments in Vanguard’s growth index VIGAX and I’m wondering if I should’ve gone with this instead! 😈
Reading this old post below is quite interesting... you hear the same things these-days about Value.

mickeyd wrote: Sat Apr 07, 2007 8:42 pm
That is one heck of a loss to take on, but I don't see Growth picking up any momentum in the near future, but I don't know any more that you did 5 years ago.
Makes me think of every "thinking about dumping international stocks for greener pastures thread".
True that. I’m going to be rich!
rascott
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Re: Vanguard U.S. Growth: Give me a reason

Post by rascott »

Fascinating thread. This fund appears to have been the best performing Vanguard MF in existence over the last 10 years.
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