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Summary VUVLX has a high dividend with broad sector exposure. Actively managed fund that has outperformed its benchmark over the last four years. Quantitatively driven investment approach which attempts to identify stocks below their true worth. The Vanguard U.S Value Fund (MUTF: VUVLX ) has shown some impressive improvement over the last several years compared to its benchmark: Russell 3000 Value Index. The fund is actively managed and in some years will be quite different from the Russell index. VUVLX had a slow start, but in the last five years has started to improve with new management and a higher turnover rate. This fund will primarily be invested in large companies, but the managers have no restrictions on what size companies they buy. The main focus of the fund’s advisors is to attempt to find stocks which are below their true worth and have strong growth potential EXPENSE RATIO The expense ratio for VUVLX is .29%. There’s no 12b-1 Distribution Fee and .26% of the expenses are management fees. Turnover rate from the last fiscal year was 66.10%. The management team saw some changes a few years ago including James D. Troyer joining the team. Troyer didn’t show up until 2012 according to Vanguard, but the fund starting improving in relationship with its benchmark in 2011: YIELD With a yield of 2.58% this stock becomes great for a long term holding. With a value fund I am looking for a long-term time horizon as an investor since it’s fully exposed to the stock market. A yield this high gives me a good opportunity to reinvest or to have a portfolio based around a yield for income. Diversification The following chart gives the top ten holdings of the fund: VUVLX has 247 holdings and 21.8% of the equity is in the top ten stocks. Great sector exposure being show here without having too much equity in the top holdings. The few holdings with over 2% equity, especially Exxon Mobil Corporation (NYSE: XOM ), have positioned themselves in the market strategically to flourish in an up market and survive comfortably if the market stagnates or hits a rough patch. Exxon has an impressive management team and a strong culture to succeed. While most of the competition is cutting jobs and decreasing amount spent on projects, Exxon is moving forward. If the price of crude oil begins to go up Exxon will be at a fantastic advantage. Even if the market for oil doesn’t rebound, the company is powerful and profitable: beating analysts’ third-quarter consensus report by $0.88 per share. If the market continues to fall XOM is a powerhouse with a high proven dividend and a large enough company to survive low oil prices. While I’m long XOM, there are still some risks to consider. Allegations and legal issues should be considered when looking at this stock. Here’s an article that gives good insight into potential problems. Legitimate or not, no one likes to get probed. Wells Fargo (NYSE: WFC ) is a great long term investment. CEO John Stumpf has publicly stated multiple times the importance of being disciplined; I believe disciplined sums up what makes this stock so strong. The strategy for loans has helped Wells Fargo for many years and makes them a fantastic long term and safe investment. There are some large banks which would benefit more if rate go up, but I don’t believe the risk is worth it. With such great arguments for rates not going up; I would much rather have my money invested in WFC. Even if rates do go up, Wells Fargo will still have a steady growth. Great diversification here even with financials being at 30.4%. Keep in mind the financial sector includes real estate, investment funds, banks, and insurance companies. With the demutualization of the insurance companies it is acceptable to have financials with so much equity. I was glad to see telecommunications and basic materials so low. Telecommunications does have the ability for some serious upside but the issue is knowing where it will come from. Everyone wants to sell you their new device. The competition is rising and causing the sector to buckle down and intelligently decide what to do next. We have seen some major flops even by the telecommunication giants and now would be a bad time to fall behind. There are plenty of good arguments for who will come out on top but I’m sure we’re all in for a few surprises. With companies working on snazzy new features and trying to be the first one to market breaking technology it is not a position I want to be heavily invested in. Conclusion VUVLX has progressively been increasing its performance, especially over the last five years: The new management team led by James D Troyer has been able to outperform the benchmark for the last five years. There are a couple risks to consider when investing in this mutual fund, even though I am bull a long term investment. Firstly, with only 0.5% foreign holdings, the fund is heavily invested in the domestic market. Secondly, there is a high turnover rate with the current management. Although there has been great performance recently, there’s extra risk when switching the fund around so much and only being invested in 247 stocks compared to the benchmark’s 1997. On a positive note, the holdings have a large percentage in companies that are safe buys which will perform over a long period of time. VUVLX is a mutual fund I would invest in if I were looking for a dividend portfolio. Scalper1 News
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