Should You Switch Funds?
Running through our checklist can help you arrive at the right answer for you.
I started receiving that question from readers in the wake of Vanguard's announcement last week that it would be reopening its Dividend Growth fund to new investors. Vanguard Dividend Growth was the original anchor equity holding in my model "bucket" mutual fund portfolios for retirees, but it closed to new investors three years ago. At the time of the closure, I recommended that investors who were already in Vanguard Dividend Growth hang on. Even though the fund is pretty large, it's focused on large and mega-caps, and Morningstar senior analyst Alec Lucas didn't think its girth would be an impediment. But because my goal is for the model portfolios to be investable, I replaced it with Vanguard Dividend Appreciation. As a large-cap index tracker, asset capacity won't be an issue for Vanguard Dividend Appreciation, and it's a low-cost fund that tracks a sensibly constructed index. It was already the anchor U.S. equity holding in my ETF bucket portfolios, though I used the traditional index fund in my mutual fund portfolios.
Christine Benz does not own (actual or beneficial) shares in any of the securities mentioned above. Find out about Morningstar’s editorial policies.