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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.

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