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Rekenthaler Report

Vanguard’s Active Stock Funds Are Very Good

But, overall, Vanguard's index funds have been better.

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Two Paths
As funds to be stashed away for decades in tax-sheltered accounts, Vanguard's active stock funds are the equal of the company's index funds. That's impressive, particularly for such a giant organization. It's one thing for a boutique firm to compete effectively against the indexes while managing a limited product line; it's quite another for a mega-complex to accomplish the task.

However, many fund purchases are made under other circumstances than for a long, untaxed, period. Although shareholders may believe they will hold a fund indefinitely, market fluctuations can alter that viewpoint. (Collectively, investors looked out much further during the relative calm of December 2007 than they did a year later, following the disaster that was 2008.) Volatility matters. So do taxes, for those who hold assets in taxable accounts.

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John Rekenthaler does not own shares in any of the securities mentioned above. Find out about Morningstar’s editorial policies.