August 2006

Vanguard Opens Two of Three New Index Funds

Vanguard yesterday announced the opening of two new mid-cap index funds and plans to introduce a new high dividend yield index fund before year end. The two new equity index funds: Vanguard Mid-Cap Value Index Fund and Vanguard Mid-Cap Growth Index Fund will be managed by Vanguard's Quantitative Equity Group. Vanguard Mid-Cap Value Index Fund seeks to track the performance of the MSCI US Mid Cap Value Index, which represents value companies of the MSCI US Mid Cap 450 Index. Vanguard Mid-Cap Growth Index Fund seeks to track the performance of the MSCI US Mid Cap Growth Index, which represents growth companies of the MSCI US Mid Cap 450 Index. Vanguard also intends to introduce a new equity index fund, Vanguard High Dividend Yield Index Fund, which will seek to track the performance of the FTSE High Dividend Yield Index.

"Simple" Mutual Fund Retirement Strategy

Walter Updegrave, Money Magazine senior editor, advises investors to "Ignore the siren song of sophisticated investments. Either you'll end up paying huge fees for a magic investing touch that may or may not be there or you'll need incredible timing to come out ahead in the long run." Citing the magazine's recommendations, he adds, "At the end of the day, what really creates the wealth you need to retire is the long-term growth potential of companies large and small. And you don't need fancy strategies to tap into that. You can do so by simply investing in a mix of low-cost stock and bond funds like those in the Money 65, our list of recommended [mutual] funds,' and concludes, "...the strategy does have three big advantages: It's cheap, it's unlikely to blow up in your face and, even though there may be occasional setbacks, it works." For more, see the full article here.

What a Difference Fund Manager Investment Makes

According to Marshall Loeb, MarketWatch, you may want to make sure your mutual fund managers hold a stake in the mutual funds you buy. Loeb reported that "...researchers found that funds whose managers have invested in them perform better: a boost of .03% in returns for every .01% of assets owned by the fund's manager." More details can be found in the article, here from the New York Daily News.

Three Global Mutual Fund Profiles

Gregg Wolper, of Morningstar.com, spotlights three "New and Noteworthy" world-stock mutual funds: no-load Oakmark Global Select (OAKGX), Thornburg Global Opportunities (THOAX), and Harbor Global Value (HIGVX) in this article via Yahoo Finance.

Leading Candidates for Domestic-Stock Fund Manager of the Year

Looking at the year to date, Russel Kinnel, of Morningstar.com, names six early favorites for Morningstar's Domestic-Stock Fund Manager of the Year Award. Kinnel's top candidates include: Bruce Berkowitz and Larry Pitkowsky of Fairholme Fund (FAIRX), Will Danoff of Fidelity Contrafund (FCNTX), Arup Datta of N/I Numeric Investors Small Cap Value (NISVX), Mason Hawkins and Staley Cates of Longleaf Partners (LLPFX), David Lee of T. Rowe Price Real Estate (TRREX), and Ed Owens of Vanguard Health Care (VGHCX). For more, see the full article published at Yahoo Finance.

Good Times Ahead for Mutual Fund Investors?

Chet Currier, a Bloomberg News columnist, foresees a brighter future for mutual fund shareholders in this article from the Salt Lake Tribune. Taking an historical perspective, Currier says, "Soon, two years will have passed since the last U.S. presidential election. The markets will have made it through that notoriously difficult period, and will be heading into the much more auspicious half of the four-year cycle, the pre-election and election years." And, he cites these impressive statistics, "From 1833 to 2004, U.S. stocks averaged a 11 percent annual gain in pre-election years and a 6.8 percent advance in election years, according to the "Stock Trader's Almanac," published by Yale Hirsch and Jeffrey Hirsch... Those returns towered over average gains of 1.6 percent a year in post-election years and 3.7 percent in mid-term years."

Money Market Funds and Short-Term Bond Funds Attact More Interest

Reflecting the appeal of rising interest rates and the use of cash as a strategic investment to improve overall portfolio stability and performance, clients of Charles Schwab & Co., Inc. have recently shown increasing interest in what has long been a second class citizen in the investing world -- cash and cash-like fixed income products. Client assets in short-term CDs, for example, grew 93 percent from June 30, 2005 to June 30, 2006. "We're seeing a shift in investor sentiment from thinking of cash as an idle deposit to using it as a strategic investment," said Charles R. Schwab, Schwab founder and CEO. "Given current interest rates and a volatile stock market, investors are looking at cash in the context of their overall portfolio, and actively using it as a diversifying investment, not just a parking spot while they investigate other options." More here.