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Vanguard Value Index Gets Its Day in the Sun

A slug of financials and lack of tech make for a very good year at Vanguard Value Index.


The market has served up a fat pitch to Vanguard Value Index Fund (VIVAX).

The boring half of the S&P 500 index has been the place to be over the past year. This fund tracks the companies in the S&P 500 that have low price/book ratios, and effectively, that means the portfolio has little exposure to tech and a lot to slower-growing parts of the market such as financials. The fund's lack of tech has proven to be a boon to its returns since the sector peaked in March. Meanwhile, when the Fed stopped hiking interest rates in 2000's second quarter, financials such as Wells Fargo (WFC) and American International Group (AIG) soared. Between April 1, 2000, and February 12, 2001, this fund gained 9%, while the S&P 500 lost a similar amount.

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Scott Cooley does not own (actual or beneficial) shares in any of the securities mentioned above. Find out about Morningstar’s editorial policies.

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