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Explorer ○○

VGHAX or VFIAX/VDIGX with Wellesley (Or even Wellington for that matter)

I own a good bit of VDIGX but am starting to wonder. One of the rationales for owning the fund is that it protects the downside, although it will lag on the upside due to it’s limited amount of holdings among other things.

In generally looking over the charts, especially since February, it SEEMS that VDIGX hasn’t exactly wowed on protecting the downside and that when ups and downs are compared/added together it appears to be essentially a wash with VFIAX.

Moreover, with a relatively low distribution VDIGX doesn’t appear to be the income provider that VFIAX is with its higher capital gains (which really doesn’t matter in my Vanguard IRA).

Why then not simply own the S&P 500 Index then a specialized fund like VDIGX? (By the way, all my other funds are active.)

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Explorer ○○

Re: VFIAX vs. VDIGX

Yogi and others am I off course on the thinking here or misreading the data?

Thanks in advance, Steve

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Explorer ○○

Re: VFIAX vs. VDIGX

This has gotten a lot of views but no responses. Is it really that old hat for most of you?

I really could use some good advice. It does seem these forums have increasingly turned to Off Topic chats or very esoteric, narrow discussions among two or three people; not like they used to be in giving good advice to more novice investors (which I humbly consider myself to be among that group).

Please ... any useful advice or analysis would be helpful. Thanks.

@yogibearbull, @PatMorgan, @Fishingrod???

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Frequent Contributor

Re: VFIAX vs. VDIGX

       Newer_Retiree -  I’am not really a fund guy but I do own 2 actively managed ones a HY multi-bond and a HY muni-bond. Usually active managed ones can be “managed” at times like this. You pay them to ditch the dead wood. Index’s are pretty much stagnant. You might follow your active managed funds through this downturn and compare them to their indexes to see if they’re worth the price of management. I prefer to pay for active professional management for my HY and CEF funds only. My other 2 fund holdings are indexes. It’s tough to beat the S&P index long term without more risk.

         As far as corrections or deep drops like this where all investing areas are affected there is no downside protection for any of us. Investments just don’t drop in value all the same. Scarred amateurs flea to MM funds and the pros buy on dips and news, a trading range. Basically the Fed telegraphed a long economic recovery in his opinion but it doesn’t mean you can’t beat the returns of a MM fund paying zilch or keep up or exceed your personal inflation rate by investing. Correct your investment plan for the next one if you have trouble with what happened.

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Explorer ○○

Re: VFIAX vs. VDIGX

Right now it is very difficult to advise anybody on anything, hence not a lot a responses. As for me, I hold some VDADX on advise of Christine because VDIGX was closed. My other stock fund is VFIAX and that's it. As a senior retiree I don't have the will to keep track of stock funds managers in order to buy/sell stuff. Those days are gone. I am more and more on the Bogleheads' camp. With so many stocks faltering on dividends and outfits going up in flames I think all I might need is a 500 index fund and que será, será. No advise here, just my outlook in life.

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Explorer ○○

Re: VFIAX vs. VDIGX

Thanks guys! You both seem to be leaning toward the Index fund it seems.

Steelpony, I agree that this is far from over and the purpose of active funds like Vdigx is to clean out the deadwood.

Though not that much time, I did look at the charts since February where much of the sharp overall declines occurred. It didn’t appear that Vdigx with its limited amount of stocks did all that much better than the Index ... not enough to wow you and not as good on the bounce backs when they occurred.

That is exactly what got me wondering in the first place. For years I have been hearing how wonderful Vdigx is and that is why I bought into it when it opened back up. Now I am questioning whether I would be better off just holding the Index with my Wellesley and other holdings.

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Frequent Contributor

Re: VFIAX vs. VDIGX

There are also many other threads on VDIGX - type ticker in the Search Box.

It has dividend-growth tilt but is essentially a blend just as VFIAX. There has been a lot of interest in it since it reopened in August 2019. It is a fine fund.

Here is a chart of VDIGX VFIAX

I don't have exposure to this area. I have a mix of funds that have more of current-income tilt or have growth stocks.

YBB
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Explorer ○○

Re: VFIAX vs. VDIGX

Thanks @yogibearbull. I appreciate your insights as always.

I did see the charts and Vdigx seems to mirror the Index ... sometimes up a little and sometimes down a little. If Vdigx doesn’t add a great deal more in protecting the downside, what then is the purpose of holding that, especially if you have Wellesley to cover that turf?

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Contributor ○

Re: VFIAX vs. VDIGX

Newer Retiree,

Very interesting that your post was almost identical to the one I posted the other day.   As Yogibearbull indicated you should be able to locate it by typing VDIGX in the search field.

Suffice to say that I think your thinking matches mine because I’m questioning the real value of owning VDIGX as compared with the S&P500 index.  Not sure there is valid reason to own any LCB fund other than the S&P500 index.  I bought VDIGX because of its: incredibly low cost for active management; solid past performance with lower risk than the index, and; its managed by the very fine folks at Wellington.  M* touts it is an excellent way to buy the “quality” part of the market.  Others like it because it is very FAANG-lite (maybe entirely) and has a low percentage in tech overall.  But FAANG and technology stocks don’t concern me.  

Like you, I’m becoming more of a Boglehead because I’ve seen over many decades than active management has low likelihood of beating the index over long periods of time.  And when I do go with active management, I want to go with a fund where the manager has plenty of latitude and flexibility to buy various financial assets and adjust asset allocation as needed to increase returns and mitigate risk.  If I’m going to effectively limit the size of the fishing hole for the PM, then I’m probably better served by indexing.  And the S&P500 index isn’t the only index, although it is an excellent one to use.  Specifically I’m thinking of whittling-down my VDIGX, and possibly directing it to:  1) more PRWCX (far and away my largest position; FXAIX (Fidelity S&P500), and; QQQ (NASDAQ 100 index).

Where are you leaning at this time?

 

 

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Follower ○○

Re: VFIAX vs. VDIGX

FWIW - I hold USMV and SPHQ rather than S&P 500; one low vol and one quality

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Frequent Contributor

Re: VFIAX vs. VDIGX


@Newer_Retiree wrote:

Thanks guys! You both seem to be leaning toward the Index fund it seems.

Steelpony, I agree that this is far from over and the purpose of active funds like Vdigx is to clean out the deadwood.

Though not that much time, I did look at the charts since February where much of the sharp overall declines occurred. It didn’t appear that Vdigx with its limited amount of stocks did all that much better than the Index ... not enough to wow you and not as good on the bounce backs when they occurred.

That is exactly what got me wondering in the first place. For years I have been hearing how wonderful Vdigx is and that is why I bought into it when it opened back up. Now I am questioning whether I would be better off just holding the Index with my Wellesley and other holdings.


         Well what I did instead of the S&P index was invest in VYM and VUG which in equal portions mimics the index. That way we receive the 3% yield from VYM the value part and we bought more of VUG to tip returns towards more growth then the index. I invested more in the top holdings also hoping to counter any dead wood. So we’re ahead on the growth part, way down on the value part but picking up cheap shares with the 3% dividend.

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Frequent Contributor

Re: VFIAX vs. VDIGX

@steelpony10 I’ve noticed that VYM has been under heavy pressure. Some moments today it was down almost double VOO. I’m guessing people are afraid of dividend cuts ahead.

Hence my recent moves away from high divvy payers toward growth. I’m guessing SCHD will hold up because it has a quality factor.

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Participant ○○○

Re: VFIAX vs. VDIGX

@Newer_Retiree,

I have to keep on telling myself that VDIGX will reposition itself, if even so slightly to outperform the index. But that is not why I hold it. I hold it to hopefully not lose as much when the **bleep** hits the fan, so that it doesn't have to make as much up in the recovery. I hold both VDADX and VDIGX and have added to each when both are down or when one lags the other, hoping to add to a value proposition. It has paid off for me with good performance off the dips.

I don't think that we have gone through enough downturn lately to hopefully experience the lesser volatility of VDIGX.

Fishingrod

 

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Explorer ○○

Re: VFIAX vs. VDIGX

@@Yogibearbull,

Can you enlighten me why you continue to use Veirx as an enhancement to Wellesley when you once demonstrated that Vfinx had better income growth (also vs. Vdigx)? Is it because of Vfinx‘s higher capital gains?

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Frequent Contributor

Re: VFIAX vs. VDIGX


@chang wrote:

@steelpony10 I’ve noticed that VYM has been under heavy pressure. Some moments today it was down almost double VOO. I’m guessing people are afraid of dividend cuts ahead.

Hence my recent moves away from high divvy payers toward growth. I’m guessing SCHD will hold up because it has a quality factor.


          Chang - we’re buy and hold investors on the most part. We only add to the best opportunities during corrections like the end of 2018 and big market swoons like now. VYM, VUG, our 8 stocks and a national muni all on reinvestment are in our taxable account specifically for LTC if ever needed. We live off of monthly CEF income from our TIRA. We picked about an additional 3-4k in annual income there the end of March. No real thinking involved just read the numbers. All should recover some day. Whether we ever need the money or values recover when I need them to is an unknown. Pretty much why I believe Mr. Market is not a dependable or especially good friend so I stay as far away as I can.

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Contributor ○

Re: VFIAX vs. VDIGX

Steelpony10 - which
stocks do you own?

Sent from my iPhone
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Frequent Contributor

Re: VFIAX vs. VDIGX


@cegibbs wrote:
Steelpony10 - which
stocks do you own?

Sent from my iPhone

Ha. Ha. I know I got this more or less correct. MSFT (30 yrs+), AAPL (off and on 20 yrs+), AMZN,MA,V, UNH (10 yrs or so), CRM,FB (last correction, 2018). I cherry pick the top holdings from the top growth funds, following the market moving smart money. No brains required.

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Contributor ○

Re: VFIAX vs. VDIGX

Steelpony10 - Very well done! Don’t underestimate your smarts in doing
that and sticking with it.
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Participant ○○

Re: VFIAX vs. VDIGX

@steelpony10

May I ask which national muni bond fund you own? As a follow-up, do you travel in the high yield muni bond space?

Thanx

Hootz

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Frequent Contributor

Re: VFIAX vs. VDIGX


@Hootz wrote:

@steelpony10

May I ask which national muni bond fund you own? As a follow-up, do you travel in the high yield muni bond space?

Thanx

Hootz


          Sure. We only own VWAHX labeled a HY muni. That’s low risk for us because about 40% of our assets are in CEF’s, the much higher yielding multi bond space. It is used as our cash holding in a taxable account and is on reinvestment also. We try to relegate capital gains to a secondary source of income by not investing in much that doesn’t yield a steady 3% which is generally more then our personal inflation rate. If we ever have to spend for LTC all the growth investments will probably be the the first to go after any cash.

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