Performance report: Vanguard funds excelled as markets climbed
April 30, 2013
Boosted by a vigorous rally in U.S. stocks over the first quarter of 2013, global stock markets registered substantial returns for the 12 months ended March 31. The broad U.S. stock market advanced 14.48% during this period, on the strength of an 11.06% return in the first quarter, as investors were encouraged by the Federal Reserve's monetary policy, the housing rebound, and some signs of improvement in the labor market.
International stocks, restrained somewhat by signs of slower growth in emerging markets and stretches of volatility over Europe's debt crisis, returned 8.30% for the 12 months. Bond returns, which were strong at the period's start, gradually waned, as investors moved into riskier asset classes. Still, the broad U.S. bond market returned 3.77% despite finishing flat over the final six months.
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Stock and bond funds from across the spectrum participated in the financial markets' positive performance. Vanguard funds, however, fared better than most of their industry peers. For the 12-month period, 78% of Vanguard funds outperformed the average returns of their respective peer groups. (This is based on data from Vanguard and Lipper Inc., an independent fund research company.)
Investment professionals are integral
There's a clear connection between Vanguard's solid record against industry peers, including the low costs of our funds, and the outstanding investment professionals who serve our clients. These professionals include internal portfolio managers and staff as well as managers at external independent investment firms.
Our Equity Investment and Fixed Income Groups manage about $1.6 trillion of our more than $2.0 trillion in U.S. mutual fund assets. The groups, comprising almost 300 investment professionals, manage all of our money market funds, most of our fixed income funds, and a majority of our quantitatively managed stock funds. Together these professionals have decades of experience developing and refining sophisticated portfolio construction and management techniques.
"Our formula is simple: Allow great people to perform and don't destroy their performance with high costs," said Chief Investment Officer Tim Buckley.
We also have relationships with 29 subadvisory firms for our active equity and fixed income funds. These firms employ 48 teams of professionals with hundreds of supporting analysts. Partnering with independent managers gives Vanguard access to a rich pool of talent. We can also objectively assess the managers and negotiate fees, aiding in our mission to keep costs as low as possible for investors.
Long-term results are notable
Vanguard funds have also produced healthy returns relative to competitors over longer time periods. As the table below illustrates, over the past 5- and 10-year periods, 83% and 89% of our funds, respectively, have outperformed the returns of their peer-group averages. The table also shows the percentage of Vanguard funds in each major asset category that exceeded the average returns of their competing fund peer groups (as determined by Lipper) over the 1-, 3-, 5-, and 10-year periods ended March 31, 2013.
Vanguard funds that outperformed their peers
(Periods ended March 31, 2013)
|1 year||3 years||5 years||10 years|
|All Vanguard funds:||78%
(271 of 348 Vanguard funds outperformed their peers; 18,251 funds in peer category for this period)
(236 of 290 Vanguard funds outperformed their peers; 15,903 funds in peer category for this period)
(216 of 261 Vanguard funds outperformed; 13,217 funds in peer category for this period)
(147 of 165 Vanguard funds outperformed; 7,925 funds in peer category for this period)
|Money market funds:||100%
(10 of 10 Vanguard funds; 951 funds in peer category)
(10 of 10 Vanguard funds; 904 funds in peer category)
(10 of 10 Vanguard funds; 854 funds in peer category)
(10 of 10 Vanguard funds; 649 funds in peer category)
(178 of 219 Vanguard funds; 10,984 funds in peer category)
(151 of 171 Vanguard funds; 9,215 funds in peer category)
(139 of 162 Vanguard funds; 7,948 funds in peer category)
(81 of 90 Vanguard funds; 4,378 funds in peer category)
(57 of 90 Vanguard funds; 3,632 funds in peer category)
(50 of 82 Vanguard funds; 3,201 funds in peer category)
(46 of 65 Vanguard funds; 2,347 funds in peer category)
(44 of 52 Vanguard funds; 1,687 funds in peer category)
(26 of 29 Vanguard funds; 2,954 funds in peer category)
(25 of 27 Vanguard funds; 2,583 funds in peer category)
(21 of 24 Vanguard funds; 2,068 funds in peer category)
(12 of 13 Vanguard funds; 581 funds in peer category)
- All investing is subject to risk, including the possible loss of the money you invest.
- Bond funds are subject to the risk that an issuer will fail to make payments on time and that bond prices will decline because of rising interest rates or negative perceptions of an issuer's ability to make payments.
- An investment in a money market fund is not insured or guaranteed by the Federal Deposit Insurance Corporation or any other government agency. Although a money market fund seeks to preserve the value of your investment at $1 per share, it is possible to lose money by investing in such a fund.
- Diversification does not ensure a profit or protect against a loss.
- Foreign investing involves additional risks, including currency fluctuations and political uncertainty. Stocks of companies in emerging markets are generally more risky than stocks of companies in developed countries.
- The competitive performance data shown represent past performance, which is not a guarantee of future results. The performance of an index is not an exact representation of any particular investment, as you cannot invest directly in an index.
- Market data source: Vanguard, based on market benchmarks. U.S. stocks represented by the Dow Jones U.S. Total Stock Market Float Adjusted Index. International stocks represented by the MSCI All Country World Index Ex USA. Bonds represented by the Barclays U.S. Aggregate Bond Index.
- For the 1-year period ended March 31, 2013, 10 of 10 Vanguard money market funds, 57 of 90 Vanguard bond funds, 26 of 29 Vanguard balanced funds, 178 of 219 Vanguard stock funds, or 271 of 348 Vanguard funds outperformed their Lipper averages. For the 3-year period ended March 31, 2013, 10 of 10 Vanguard money market funds, 50 of 82 Vanguard bond funds, 25 of 27 Vanguard balanced funds, 151 of 171 Vanguard stock funds, or 236 of 290 Vanguard funds outperformed their Lipper averages. For the 5-year period ended March 31, 2013, 10 of 10 Vanguard money market funds, 46 of 65 Vanguard bond funds, 21 of 24 Vanguard balanced funds, 139 of 162 Vanguard stock funds, or 216 of 261 Vanguard funds outperformed their Lipper averages. For the 10-year period ended March 31, 2013, 10 of 10 Vanguard money market funds, 44 of 52 Vanguard bond funds, 12 of 13 Vanguard balanced funds, 81 of 90 Vanguard stock funds, or 147 of 165 Vanguard funds outperformed their Lipper averages. Results will vary for other time periods. Only funds with a minimum 1-, 3-, 5-, or 10-year history, respectively, were included in the comparison. (Source: Lipper Inc.) Note that the competitive performance data shown represent past performance, which is not a guarantee of future results and that all investments are subject to risks. For the most recent performance, visit our website at vanguard.com/performance.