17 Managed Funds That Have Beaten The Indexes Over A 17 Year Period

Comparing Average Yearly Performance Returns for Vanguard Managed Funds Vs. Those of US or International Index Funds

Fund Name
(Symbol)
(US) = US Focus
(I) = International Focus
Average Yearly
Performance
Current
Expense
Ratio
Average
Difference
Per Year
(+ = managed fund outperforms)
(- = index fund outperforms)
Energy (VGENX) (US) 13.55 .37 +6.90
Precious Metals and Mining (VGPMX) (I) 13.19 .35 +8.12
Health Care (VGHCX) (US) 12.92 .36 +6.27
Selected Value (VASVX) (US) 12.06 .39 +5.41
Capital Opportunity (VHCOX)* (US) 11.49 .45 +4.84
Strategic Equity (VSEQX) (US) 11.15 .21 +4.50
International Explorer (VINEX) (I) 9.50 .42 +4.43
Explorer (VEXPX) (US) 9.41 .49 +2.76
PRIMECAP (VPMCX) (US) 9.12 .40 +2.47
Global Equity (VHGEX) (I) 9.03 .57 +3.96
Windsor (VWNDX) (US) 9.01 .39 +2.36
Equity Income (VEIPX) (US) 8.60 .26 +1.85
Windsor II (VWNFX) (US) 8.53 .34 +1.88
Mid-Cap Growth (VMGRX) (US) 7.89 .43 +1.24
Dividend Growth (VDIGX)* (US) 7.52 .33 +0.87
Morgan Growth (VMRGX)* (US) 6.34 .40 -0.31
International Value (VTRIX) (I) 6.09 .46 +1.02
International Growth (VWIGX) (I) 6.01 .46 +0.94
Growth and Income (VQNPX) (US) 5.93 .34 -0.72
U.S. Growth (VWUSX) (US) 3.02 .46 -3.63

Note: Funds shown with an asterisk (*) are currently closed to new investors.

Now, here are the same results for the above two Vanguard index funds

Fund Name
(Symbol)
Average Yearly
Performance
Current
Expense
Ratio
Total Stock Market Index (VTSMX) 6.65 .16
Total International Stock Index (VGTSX) 5.07 .19

As you can see in the last column of the bigger table, 17 out of the 20 managed funds delivered better 1 year average performance than the appropriate broad market index. The average per year better performance was 2.76%. You can observe that the 20 funds included three funds that were not diversified across the broad market, so-called sector funds; these funds proved to have the best average yearly performance of the 20. Therefore, to beat the indexes to this degree, one would have needed to select not just the typical diversified types of funds, but also included some other relatively low cost funds within the Vanguard lineup that would not at all closely reflect the entire market as the indexes did.

Just in case you're wondering whether the above results would remain valid if one merely considered the average annualized returns over the entire 17 year period instead of averaging each fund's one year returns over 17 yearly periods, data shows that the answer is emphatically yes. According to that analysis, the entire 20 funds averaged an annual return of 7.16%, beating the "buy and hold" annualized returns of VTSMX at 4.92% and VGTSX at 2.72%. The analysis of 20 funds over 17 separate time periods involved 340 separate data points, highly unlikely to introduce chance into the result vs. analyzing just 20 data points when using just the 17 year total return. And, additionally, while most investors undoubtedly don't hold most of their funds for an uninterrupted 17 years, most will eventually drop underperforming managed funds out of their portfolio, likely making the one-year start and stop points more realistic.

Comparing Yearly Broad International Stock Market Index Performance with That of Average International Fund

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