Vanguard 529 Index Fund Portfolio Performance for April & May 2012
Posted on | June 11, 2012 | 5 Comments
This is going to be a quick post this month, very mechanical. Playing catch-up. Considering the market performance during the month of May, I want to ensure everything is accurate.
At the end of April, the allocation of our Vanguard portfolio was:
- Vanguard Small-Cap Index (NAESX):
- 16.59% (down from 16.69%; goal = 15%)
- Vanguard Total Stock Market Index (VTSMX):
- 16.39% (down from 16.43%; goal = 15%)
- Vanguard Total International Stock Index (VGTSX):
- 36.85% (down from 37.21%; goal = 40%)
- Vanguard High-Yield Bond (VWEHX):
- 15.62% (up from 15.39%; goal = 15%)
- Vanguard Total Bond Market Index (VBMFX):
- 14.54% (up from 14.28%; goal = 15%)
Now let’s look at May. Here is the allocation of our Vanguard portfolio at the end of May 2012:
- Vanguard Small-Cap Index (NAESX):
- 16.48% (down from 16.59%; goal = 15%)
- Vanguard Total Stock Market Index (VTSMX):
- 16.37% (down from 16.39%; goal = 15%)
- Vanguard Total International Stock Index (VGTSX):
- 35.02% (down from 36.85%; goal = 40%)
- Vanguard High-Yield Bond (VWEHX):
- 16.48% (up from 15.62%; goal = 15%)
- Vanguard Total Bond Market Index (VBMFX):
- 15.65% (up from 14.54%; goal = 15%)
How exciting! Our threshold for rebalancing has been tripped by the Total International Stock Index fund. Our rules state that the threshold has to be tripped for two straight months in order to avoid reacting to onetime shocks in the market. Yes, I am going to call 35.02% close enough to 5% from ideal asset allocation (this is a government-sponsored program and all). Not knowing what is going to happen next month, let’s think this through for a second. We are allowed only one rebalance a year; does this feel like the correct time? The year is half over, so that is a plus (as opposed to this occurring in January). The bond market has been in a bull market for quit some time because of the Federal Reserve asset purchase program. As a matter of fact, the yield (inversely related to price) has recently hit 1.5%, the lowest yield since before I was born (yikes). If I were a betting man, I’d say the price is going to go down (increasing yield—lucky I did not make that bet in 2001), not up from here. Naturally, we have all heard what is going on in Europe (pay attention, if our yields climb back up, we will be in the same boat); rebalancing would mean buying international stock when everyone else is selling. Only a percentage of the International index fund is Europe.
Thumbcharts.com - Ten Year Treasury Note
The performance of our benchmarks between April 30, 2012, and May 31, 2012:
- Growth Fund of America (CGFAX): -6.80% (without fees)
- Oppenheimer Blended Age-Based 0–6 Years Portfolio: -7.10%
The performance of our Vanguard Index Fund portfolio between April 30, 2012, and May 31, 2012:
- Vanguard 70/30 Stock/Bond Index Fund Portfolio: -6.42%
|
-11.06% |
|
-6.23% |
|
-6.78% |
|
-0.98% |
|
+0.96% |
Yes, an 11% drop in one month! Let’s see what June brings and see if we need to rebalance or not.
You can see the relative performance of each portfolio on the performance page: Vanguard Index Fund 529 Performance.
Tags: 10-Year Yield > 529 > 529 Performance > Index Fund > rebalance > Vanguard
March-2012 Vanguard 529 Index Fund Portfolio Update
Posted on | June 1, 2012 | No Comments
This is going to be a quick post this month, very mechanical. Playing catch up. With the market performance during the month of May, I want to ensure everything is accurate, which means I have to get March and April updated first! March-2012 was the first month of the higher monthly payments, $76/month.
The performance of our benchmarks between February 29, 2012, and March 30, 2012:
- Growth Fund of America (CGFAX): +2.48% (without fees)
- Oppenheimer Blended Age-Based 0–6 Years Portfolio: +1.49%
The performance of our Vanguard Index Fund portfolio between February 29, 2012, and March 30, 2012:
- Vanguard 70/30 Stock/Bond Index Fund Portfolio: +0.42%
|
-0.75% |
|
+3.06% |
|
+2.30% |
|
-0.52% |
|
–0.58% |
At the end of March, the allocation of our Vanguard portfolio was:
- Vanguard Small-Cap Index (NAESX):
- 16.69% (up from 16.46%; goal = 15%)
- Vanguard Total Stock Market Index (VTSMX):
- 16.43% (up from 16.08%; goal = 15%)
- Vanguard Total International Stock Index (VGTSX):
- 37.21% (down from 37.74%; goal = 40%)
- Vanguard High-Yield Bond (VWEHX):
- 15.39% (down from 15.59%; goal = 15%)
- Vanguard Total Bond Market Index (VBMFX):
- 14.28% (down from 14.46%; goal = 15%)
You can see the relative performance of each portfolio on the performance page: Vanguard Index Fund 529 Performance.
Memorial Day 2012 Reading
Posted on | May 25, 2012 | 4 Comments
Happy Memorial Day, everyone. I hope you have some fun and relaxing plans for the long weekend. On my “to-do” list is to catch up on my posts and 529 performance. I hope to get the last couple of months updated for you.
In the meantime, here are some quick articles to read over the weekend if you have some quiet time or to just bookmark and return to later.
- Here is the first-quarter update for the stock picking contest I entered: Diversified ETF Portfolio Performance For Q1.
- My two-year performance update for our Vanguard Index Fund portfolio was chosen to be part of the Carnival of Passive Investing. This month’s carnival also has great articles on Roth IRAs and converting traditional IRAs to Roth IRAs, must-reads: Carnival of Passive Investing #17.
- In Vanguard news: Vanguard High-Yield Corporate Fund closes to new investors (VWEHX). (Disclosure: Our 529 holds this fund, and I also hold this fund in a non-retirement account, with an 11% yield on cost.)
- Another interesting Vanguard article: How to use a tax refund to shore up your finances.
- A CNBC video: Bogle on Social Media Stocks: ‘A Dangerous Game’. Jack Bogle discusses social media and individual stocks.
- Excellent Morningstar letter to the SEC: Letter to SEC: Retirement-Fund Investors Need More Details.
- Interesting article on Yahoo! in regard to start-ups: Three Business You Can Start for $1,000.
- Tips for Life from the Business Insider: 14 Lessons From Benjamin Franklin About Getting What You Want In Life.
- Finally, a nice page on the History of Memorial Day. From the website:
“To help re-educate and remind Americans of the true meaning of Memorial Day, the “National Moment of Remembrance” resolution was passed on Dec 2000 which asks that at 3 p.m. local time, for all Americans “To voluntarily and informally observe in their own way a Moment of remembrance and respect, pausing from whatever they are doing for a moment of silence or listening to ‘Taps.”
Tags: 401k Rollover > Blogroll > Carnival > ETF Portfolio > Jack Bogle > Passive Investment > Roth IRA > Startup > Vanguard > VWEHX
Two-Year Performance of the Vanguard 529 Index Fund Portfolio
Posted on | March 25, 2012 | 3 Comments
Another year has passed and it is time to review the performance of our Vanguard 529 portfolio. All returns noted below are from February 24, 2010, through February 29, 2012. Before I go into the actual results, I would like to reiterate the importance of a plan. I will be comparing the results with the overall market, which technically is not a valid comparison since 30% of our portfolio is in bonds. The benchmarks are at least 529 investment options, so they are more relevant. More important than our performance relative to the market or our benchmarks is our performance relative to our goal of investing. That is, at the end of the day, the only thing that matters is how we perform to plan. Investing carries a risk; therefore, there should be a realistic and achievable goal and plan associated with that risk. Here is our plan: Link.
How are we doing? Great! According to our plan, at the end of February 2012, the value of the 529 should be at $5,046.43. The actual value is $5,664.76, which is 12.25% ahead of plan. How do we react to this? At this time, we do not. If we were behind our plan, we might want to increase our monthly payment to “catch up.” Also, if the monthly payment were starting to stretch our budget too much, and we were ahead of plan, we could put off increasing the monthly payment. What has enabled this performance? Overall market conditions that have outpaced our conservative, yet realistic projected 7% annual growth rate in our plan and the additional contributions of family members and Upromise (THANK YOU, FAMILY MEMBERS!).
The monthly contribution amount needs to increase approximately 23% each year, according to our plan. This increases our monthly payment from $62/month to $76/month, amounting to an extra $168 per year.
Finally, some housekeeping. When I refer to CAGR, I am referring to compound annual growth rate. The plan assumes a CAGR of 7%, meaning each year, the value increases by 7%. CAGR is calculated with the equation below, where N is the number of years (or periods) in question. For Initial Value, I am using all money (minus Upromise) added to the fund, and for Ending Value I am using the value of the portfolio on February 29, 2012.
Compound Annual Growth Rate
First, let’s see what Mr. Market has done over the last two years.
| Index | 2-Year Return (%) | CAGR (%) |
| S&P 500 | +23.56 | +11.16 |
| Dow | +24.85 | +11.74 |
| NASDAQ | +32.69 | +15.19 |
Let’s see how our benchmark 529 funds did during the last two years.
| Company | Fund | 2-Year Performance (%) | CAGR (%) |
| OppenheimerFunds | Blended Age-Based 0-6 Years Portfolio | +17.83 | +8.55 |
| American Funds | American Funds Growth Fund of Amer 529A | +10.21 | +4.98 |
The Growth Fund of America includes its 5.25% front-end load. The dividend from Growth Fund of America is not included in its cost basis. The load almost cuts its performance in half.
Drumroll, please. Here is the performance of our Vanguard 529 Index Fund portfolio over the last two years.
| Company | 2-Year Performance (%) | CAGR (%) |
| Vanguard | +16.18 | +7.79 |
Being a more moderate portfolio, I would expect the 70/30 stock/bond split to underperform the general market and the more aggressive benchmarks. The Oppenheimer Blended Age-Based 7–9 Years Portfolio is actually a closer benchmark; we will have to wait a couple years in order to start comparing our portfolio to that specific benchmark.
In summary, if it were not for having a written plan, we would not know if the 16% increase over the last two years was good, bad, or just OK. Since we are 12% ahead plan, we know it is very good! I am very happy with the performance of this portfolio.
Tags: 529 Performance > Index Fund > Vanguard > Vanguard 529
Feb-2012 Vanguard 529 Index Fund Portfolio Performance
Posted on | March 18, 2012 | No Comments
This is going to be a quick post this month since I will be following it up shortly with a year-end recap!
Overall market performance between January 31, 2012, and February 29, 2012:
- S&P 500 (^GSPC): +4.06%
- Dow Jones Industrial Average (^DJI): +2.53%
- NASDAQ (^IXIC): +5.44%
The performance of our benchmarks between January 31, 2012, and February 29, 2012:
- Growth Fund of America (CGFAX): +4.41% (with dividend but without fees)
- Oppenheimer Blended Age-Based 0–6 Years Portfolio: +4.11%
The performance of our Vanguard Index Fund portfolio between January 31, 2012, and February 29, 2012:
- Vanguard 70/30 Stock/Bond Index Fund Portfolio: +3.37%
|
+5.08% |
|
+4.25% |
|
+3.17% |
|
+1.09% |
|
–0.06% |
At the end of February, the allocation of our Vanguard portfolio was:
- Vanguard Small-Cap Index (NAESX):
- 16.46% (up from 16.45%; goal = 15%)
- Vanguard Total Stock Market Index (VTSMX):
- 16.08% (up from 15.90%; goal = 15%)
- Vanguard Total International Stock Index (VGTSX):
- 37.74% (up from 37.00%; goal = 40%)
- Vanguard High-Yield Bond (VWEHX):
- 15.59% (down from 15.76%; goal = 15%)
- Vanguard Total Bond Market Index (VBMFX):
- 14.46% (down from 14.89%; goal = 15%)
The bond portion of our moderate portfolio is starting to lose ground. This is not the first time this has happened, but what is different this time is falling unemployment, lowered European credit risk, and a strong bull market in stocks. Bonds have had a safety net under them from the Federal Reserve’s quantitative easing policies. I would imagine those policies are coming to an end, as long as there are no major hiccups between now and the election (another round would be too unfavorable during a presidential election). The good news is that the money coming out of bonds will flow into stocks, which we have exposure to. Also, falling bond prices mean higher dividend yields; therefore, the shares we already own will “pay more” in the future (this may not offset the price drop though).
Here is a graph that plots the weekly price action of the Vanguard Total Bond Market Index (VBMFX) for the last two years. The last seven weeks have been flat.
2-Yr Weekly Price Action of VBMFX
You can see the relative performance of each portfolio on the performance page: Vanguard Index Fund 529 Performance.
Tags: 529 Performance > Bond Performance > Oppenheimer > Vanguard
Vanguard 529 Index Fund Portfolio Performance: Dec 2011 & Jan 2012
Posted on | February 12, 2012 | No Comments
Playing a little catch-up this month. I will provide the performance of our Vanguard Index Fund portfolio for the months of December 2011 and January 2012. I will fight the urge to comment on year-end (2011) performance; since our “year” ends in February, I will provide yearly performance data at that time.
Since my last report, the S&P 500 has broken out of its second trading range and has a strong upward momentum. Can this momentum continue? With unemployment improving and corporate spending still strong, I think so. Interesting note: if you were able to invest in the Vanguard S&P 500 Index Fund (VFINX) at the low in August 2011, you would have had a 17% gain as of February 2012—a year’s worth of growth in five months. Timing the market is always tough and this is a prime example of dollar-cost averaging. Our investments during August 2011 and September 2011 have grown nicely.
Special congratulations have to go out the NASDAQ. The NASDAQ is trading above its post–Internet bubble high! The NASDAQ is at its highest since the bottom in July 2002. Some math: if you were able to invest at the low of the NASDAQ (July 2002), you would have had a 142% gain as of February 2012.
One final housekeeping item. This month’s return for the Growth Fund of America (CGFAX) includes its dividend, which was paid in December. I also updated the dividend from December 2010, since I had previously not included it.
Performance for December 2011:
Overall market performance between November 30, 2011, and January 03, 2012:
- S&P 500 (^GSPC): +2.41%
- Dow Jones Industrial Average (^DJI): +2.92%
- NASDAQ (^IXIC): +1.08%
The performance of our benchmarks between November 30, 2011, and January 03, 2012:
- Growth Fund of America (CGFAX): +0.75% (with dividend but without fees)
- Oppenheimer Blended Age-Based 0–6 Years Portfolio: +1.16%
The performance of our Vanguard Index Fund portfolio between November 30, 2011, and January 03, 2012:
- Vanguard 70/30 Stock/Bond Index Fund Portfolio: +1.28%
|
+0.10% |
|
+2.25% |
|
+1.52% |
|
+3.18% |
|
+0.93% |
At the end of December, the allocation of our Vanguard portfolio was:
- Vanguard Small-Cap Index (NAESX):
- 16.18% (-%; goal = 15%)
- Vanguard Total Stock Market Index (VTSMX):
- 15.93% (-%; goal = 15%)
- Vanguard Total International Stock Index (VGTSX):
- 36.66% (-%; goal = 40%)
- Vanguard High-Yield Bond (VWEHX):
- 15.966% (-%; goal = 15%)
- Vanguard Total Bond Market Index (VBMFX):
- 15.26% (-%; goal = 15%)
NOTE: My Excel formulas had an error in them, so I lost the history on the allocation percentages. I have gone back and recalculated December 2011 and January 2012.
Performance for January 2012:
Overall market performance between January 03, 2012, and January 31, 2012:
- S&P 500 (^GSPC): +2.77%
- Dow Jones Industrial Average (^DJI): +1.90%
- NASDAQ (^IXIC): +6.23% (!! WOW !!)
The performance of our benchmarks between January 03, 2012, and January 31, 2012:
- Growth Fund of America (CGFAX): +5.05% (before fees)
- Oppenheimer Blended Age-Based 0–6 Years Portfolio: +3.21%
The performance of our Vanguard Index Fund portfolio between January 03, 2012, and January 31, 2012:
- Vanguard 70/30 Stock/Bond Index Fund Portfolio: +3.59%
|
+4.32% |
|
+3.53% |
|
+5.55% |
|
+2.43% |
|
+1.04% |
At the end of January, the allocation of our Vanguard portfolio was:
- Vanguard Small-Cap Index (NAESX):
- 16.45% (up from 16.18%; goal = 15%)
- Vanguard Total Stock Market Index (VTSMX):
- 15.90% (down from 15.93%; goal = 15%)
- Vanguard Total International Stock Index (VGTSX):
- 37.00% (up from 36.66%; goal = 40%)
- Vanguard High-Yield Bond (VWEHX):
- 15.76% (down from 15.96%; goal = 15%)
- Vanguard Total Bond Market Index (VBMFX):
- 14.89% (down from 15.26%; goal = 15%)
You can see the relative performance of each portfolio on the performance page: Vanguard Index Fund 529 Performance.
Here are some comments from Vanguard economists who share their insights on the U.S. and Europe for 2012:
Tags: 2012 Outlook > 529 Performance > CGFAX > Index Fund > Joseph H. Davis > Peter Westaway > Vanguard
Best 2012 Stocks Contest — Diversified ETF Portfolio
Posted on | January 4, 2012 | 3 Comments
As you may be aware, I am not the only investment or financial blogger on the web! The web has provided such a great resource for everyone interested in investing; the collaboration is incredible. The Financial Blogger has a yearly contest in which other bloggers develop portfolios of four stocks that they think will outperform the market in that calendar year. Last year’s winner was Dividend Growth Investor (DGI), who has an awesome 15.36% return. Dividend Growth Investor’s performance highlights the power of strong, international, dividend-paying companies. DGI kept the same four stocks for the 2012 contest—what conviction! I believe this also shows that stocks of companies that increase their dividends are truly an investment (as opposed to a trade).
Since I do not want to promote individual stocks on this blog, I am going to propose a diversified portfolio of four ETFs in my contest entry. This contest has simple rules; they are as follows:
- Four stocks picked at the beginning of the year
- No trading allowed (buy and hold)
- Canadian or USA stocks
- Dividends count in end-of-year yield calculation
1. I am big fan of dividend-paying stocks. They provide income (and “free” shares if the dividends are reinvested, lowering your cost per share) and can have a “floor” to their prices. If the price drops too much (for example, because of bad news from Europe), the yield increases. As the yield increases, the stock becomes more and more attractive to buyers. The financial sector is still too risky for me, especially when it comes to dividends. Some banks are reinstating dividends and some are actually increasing their dividends, but it just takes one act of Congress (during an election year) or a new regulation to reverse the positive dividend trend.
ETF: WisdomTree Dividend ex-Financials Fund
WisdomTree Dividend ex-Financials index measures the performance of high dividend-yielding stocks outside the financial sector. The index consists primarily of large- and mid-capitalization companies listed on major U.S. stock exchanges that pass WisdomTree Investments market capitalization, liquidity and selection requirements.
2. Next it is time for some diversification. Typically, different sectors or asset classes act independently of each other (this is referred to as correlation, or lack thereof). Last year, everything was correlated. All sectors and/or asset classes would go up or down together. I hope some of the correlation goes away this year. Typically, real estate investment trusts (REITs) have a low correlation to stocks. I like their income, and as the economy slowly improves, the sector should improve.
ETF: Vanguard REIT Index Fund ETF Shares
The fund employs a passive management or indexing investment approach designed to track the performance of the MSCI US REIT Index. The MSCI US REIT Index, a free float-adjusted market capitalization index, consists of equity REITs that are included in the MSCI US Investable Market 2500 Index, except for specialty equity REITs that do not generate a majority of their revenue and income from real estate rental and leasing operations.
3. As mentioned previously, I am a little cautious of the financial sector. There is one niche sector that I do like, even though it is a little more risky: business development companies (BDCs). BDCs are typically closed-end management investment companies that make long-term private investments. For tax purposes, they are commonly structured as regulated investment companies (RICs), which means that the companies have to pay much of their taxable income out to shareholders as dividends. These companies focus on making business loans to lower- and middle-market companies. They provide long-term debt as well as equity capital. Most BDCs will also offer managerial expertise to assist the companies they invest in, as needed. I like BDCs because they are filling in the void left by regional banks, which, since the financial crisis, have stopped or limitied thier lending to small and midsized companies.
ETF: ETRACS Linked to the Wells Fargo Business Development Company Index
The ETRACS Linked to the Wells Fargo Business Development Company Index due April 26, 2041 is designed to track an investment in the Wells Fargo Business Development Company Index (“Index”), and may pay a variable quarterly coupon linked to the cash distributions associated with the underlying BDC constituents, less investor fee. The Wells Fargo Business Development Company Index is a float adjusted, capitalization-weighted Index that is intended to measure the performance of all Business Development Companies (“BDC”) that are listed on the New York Stock Exchange (“NYSE AMEX”) or NASDAQ and satisfy specified market capitalization and other eligibility requirements. To qualify as a BDC, the company must be registered with the Securities and Exchange Commission (“SEC”) and have elected to be regulated as a BDC under the Investment Company Act of 1940 (“1940 Act”).
4. Finally, my fourth pick. As mentioned in my previous post, inflation can be a killer. I would like some inflation protection. Typically, dividend-paying stocks can keep up with inflation over time. A short-term spike in inflation can dampen profits in the short term, though. I am guessing the inflation we will see over the next year will be either food or energy related. One way to invest would be through Treasury Inflation-Protected Securities (TIPS), which are special bonds from the U.S. government. The TIP ETF from iShares currently has a nice yield around 4%. There is one other risk I would like to hedge against over the next year, and that is geopolitical tensions. Any issues in the Middle East could upset energy prices and drive down stock prices; I would like a hedge against that. I decided to go with a commodity ETF that follows the energy sector. I hope to get some inflation protection and a hedge against geopolitical tensions.
ETF: PowerShares DB Energy Fund
The PowerShares DB Energy Fund (Fund) is based on the DBIQ Optimum Yield Energy Index Excess Return™ (Index) and is managed by DB Commodity Services LLC. The Index is a rules-based index composed of futures contracts on some of the most heavily traded energy commodities in the world: Light Sweet Crude Oil (WTI); Heating Oil; Brent Crude Oil; RBOB Gasoline; and Natural Gas. The Index is intended to reflect the performance of the energy sector.
Here is a final summary of my ETF portfolio for 2012:
| Ticker | ETF | Expense Ratio | Yield |
|---|---|---|---|
| DTN | WisdomTree Dividend ex-Financials | 0.38% | ~4.0% |
| VNQ | Vanguard REIT Index | 0.12% | ~4.4% |
| BDCS | ETRACS Business Development Company Index | 0.86% | ~7.5% (variable) |
| DBE | PowerShares DB Energy | 0.80% | 0%(ouch) |
I will provide quarterly updates and track the dividend reinvestments. For a benchmark, I am going to use Vanguard S&P 500 Index ETF, ticker: VOO. Here are my starting positions for each ETF:
| ETF | Jan. 3, 2012 price @ open |
|---|---|
| DTN | $52.76 |
| VNQ | $59.05 |
| BDCS | $20.53 |
| BDE | $27.95 |
| VOO | $58.45 |
Tags: BDC > BDCS > Business Development Companies > Commodity > DBE > Dividend Investing > DTN > Investment Contest > REIT > VNQ
Inflation: The Killer of Investment Returns
Posted on | January 2, 2012 | No Comments
We know what inflation is: the rising of prices. If you had $20 today and put it under your mattress, 20 years from now, that $20 would have a lot less buying power. Let’s look at an example. The government tracks inflation in order to make adjustments to Social Security. Its inflation metric is called the Consumer Price Index (CPI). From November 2010 to November 2011, the CPI increased from 218.803 to 226.23, a 3.39% increase. The Vanguard S&P 500 Index Fund (VFINX) returned 5.63% (with dividends reinvested). The real return, after inflation, was only 2.24%.
The nice folks at the PNC Financial Services Group (PNC) have continued the tradition of determining the cost of the 12 Days of Christmas. This year, the cost has increased only 3.5%, in line with the CPI. Remember, last year, the cost increased 9.2% over 2009, and in 2009 it increased only 1.8% over 2008 prices. This year, two turtle doves increased by 25% and four calling birds decreased by –13.3%.
PNC really did a great job on the interactive website this year; I recommend taking some time and playing around with it. Great for little ones!
Link: PNC – Christmas Price Index
Tags: Christmas Gifts > Christmas Price Index > Inflation > PNC
Nov-2011 Vanguard 529 Index Fund Portfolio Performance
Posted on | December 31, 2011 | No Comments
Happy New year to everyone. I hope 2011 was a rewarding year for you and that 2012 will be even better. Even though this is my Nov-2011 performance post (little late, life got in the way, I had to take some time off to study for a professional exam). Let’s take a second to look at the market performance over the past calender year. Over the last year the Vanguard S&P 500 Index fund was down -1.14% without dividends. If you take into account dividends and those dividends are re-invested, the Vanguard S&P 500 Index fund was up +0.24%. (Source: Yahoo! Finance) Never under-estimate the power and importance of dividends, espically, reinvesting dividends. In a couple months we can review the 2-year performance of our 529 Index Fund portfolio.
November was another volatile month for the markets. The month started off well behaved and traded “flat”. Need the end of the month the market took a nose dive based on bad news out of Europe, only to recover by the very end of the month. I added a third line to the chart of the Vanguard S&P 500 Index fund. One can see a second, higher, trading range forming between 111.5 and 118.
S&P 500: Nov-2011 (Year to Date)
Overall market performance between October 31, 2011, and November 30, 2011:
- S&P 500 (^GSPC): -0.51%
- Dow Jones Industrial Average (^DJI): +0.76%
- NASDAQ (^IXIC): -2.39%
Our sample actively managed mutual fund, the Growth Fund of America (CGFAX), was down -0.55% (before fees) between October 31, 2011, and November 30, 2011. Whereas our age-based benchmark, the Oppenheimer Blended Age-Based 0–6 Years Portfolio, was down -1.26%.
Our more conservative Vanguard index fund portfolio was down -1.57% between October 31, 2011, and November 30, 2011 (before the monthly automatic investment). The heavy weighting in the International Index fund hurt us this month, in addition to the High-Yeild Corporate Bond fund. All five funds were in the red this month. Here is the performance of each individual fund in our index fund portfolio:
|
-2.88% |
|
-0.29% |
|
-0.40% |
|
-2.07% |
|
-0.33% |
At the end of October, the allocation of our Vanguard portfolio was:
- Vanguard Small-Cap Index (NAESX):
- 16.16% (up from 16.01%; goal = 15%)
- Vanguard Total Stock Market Index (VTSMX):
- 15.79% (up from 15.62%; goal = 15%)
- Vanguard Total International Stock Index (VGTSX):
- 37.05% (down from 37.45%; goal = 40%)
- Vanguard High-Yield Bond (VWEHX):
- 15.68% (down from 15.79%; goal = 15%)
- Vanguard Total Bond Market Index (VBMFX):
- 15.32% (up from 15.14%; goal = 15%)
You can see the relative performance of each portfolio on the performance page: Vanguard Index Fund 529 Performance.
Tags: 2012 > 529 Performance > CGFAX > Index Fund > Oppenheimer > Vanguard
Oct-2011 Vanguard 529 Index Fund Portfolio Performance
Posted on | December 12, 2011 | No Comments
October was a good month for the markets, especially when you use the end of September as your comparison. You will remember, the last update had poor performance because our end-of-month trades happened to correspond with the high of the trading range and the low of the trading range. During October, the S&P 500 broke out of its trading range after testing the “ceiling” a few times in early October.
S&P 500 Trading Range, Oct-2011
Overall market performance between September 30, 2011, and October 31, 2011:
- S&P 500 (^GSPC): +10.77%
- Dow Jones Industrial Average (^DJI): +9.54%
- NASDAQ (^IXIC): +11.13%
Our sample actively managed mutual fund, the Growth Fund of America (CGFAX), was up +10.45% (before fees) between September 30, 2011, and October 31, 2011. Whereas our age-based benchmark, the Oppenheimer Blended Age-Based 0–6 Years Portfolio, was up +10.21%. Even though the performance of CGFAX is impressive, it still did not outperform the Total Stock Market Index, Small-Cap Index, S&P 500, or NASDAQ.
Our more conservative Vanguard index fund portfolio was up +8.79% between September 30, 2011, and October 31, 2011 (before the monthly automatic investment). Even though this is less than the other two more aggressive investments, 8.79% is not bad by any means. The money that was put into the account for the month of September has already had more than a year’s worth of growth. Keep in mind, our yearly target is 7% on average. Here is the performance of each individual fund in our index fund portfolio:
|
+10.15% |
|
+11.51% |
|
+15.24% |
|
+5.34% |
|
+0.20% |
At the end of October, the allocation of our Vanguard portfolio was:
- Vanguard Small-Cap Index (NAESX):
- 16.01% (up from 15.11%; goal = 15%)
- Vanguard Total Stock Market Index (VTSMX):
- 15.62% (up from 15.23%; goal = 15%)
- Vanguard Total International Stock Index (VGTSX):
- 37.45% (down from 36.93%; goal = 40%)
- Vanguard High-Yield Bond (VWEHX):
- 15.79% (down from 16.30%; goal = 15%)
- Vanguard Total Bond Market Index (VBMFX):
- 15.14% (down from 16.43%; goal = 15%)
You can see the relative performance of each portfolio on the performance page: Vanguard Index Fund 529 Performance.
The age-based fund has taken back first place by a small margin and all three investment options are back to the positive territory. Last month the actively managed fund had actually lost money (its value was below the money put into the fund).
Finally, here is an interesting article to read in regard to index fund investing: Indexing Fans Have a Lot to Thank Vanguard for This Year, by William Samuel Rocco of Morningstar.
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Follow along as I test three portfolios against each other—using my own money! You have read the investment blogs, now see these theories in action.
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