Vanguard, the biggest fund family of the United States in terms of asset under management, is expected to put up a stellar show in the final quarter of this year. It offers a variety of investment options from index funds to key actively managed funds. The company helps to create effective investment goals with a suitable asset allocation and low-cost portfolio.
While a bulk of Vanguard’s assets are invested in index funds, around 30% of these are focused on actively managed funds. Strong performance by most of the mutual funds of this fund family calls for investment in some of the major Vanguard mutual funds.
What Contributed to Vanguard’s Strong Fund Performance?
The biggest fund family of the United States has successfully attracted the interests of more than 20 million investors on the back of its low-cost approach. This approach helped most of the Vanguard index funds to perform better than their peers. Along with index funds, there are plenty of actively managed Vanguard mutual funds which bear low expense ratios.
Most of the Vanguard funds are managed outside. Unlike other fund families, Vanguard doesn’t hire its own employees to manage its funds. Instead, the biggest fund family of the world hires managers from outside the company. This makes it easier to replace the funds in case the manager fails to deliver. This, in turn, helps to control the overall cost of the actively managed Vanguard funds.
As per the editor of The Independent Adviser for Vanguard Investors newsletter, Dan Wiener, out of 18 domestic, non-sector, actively managed stock and balanced funds, 14 performed better than the S&P 500 index in the last 15 years. One of the major reasons for this stupendous run is Vanguard’s ability to offer low-cost funds consistently.
Sectors Contributing to Vanguard’s Gains
Vanguard invests in a variety of sectors that are sensitive, cyclical and defensive. From the sensitive sectors, technology is the largest holding. In the cyclical sectors, the fund family invests the maximum in the financial sector, while in defensive sectors it invests heavily in healthcare.
