I picked the following funds (and their weight) for my Vanguard IRA yesterday.
Vanguard International Value 50% (developed market large cap value)
Vanguard Winsor II 25% (US large cap value)
Vanguard Selected Value 25% (US mid cap value)
The first two funds are in my current 401k plan, I found the Vanguard Selected Value through Kiplinger magazine.
I looked at a fund’s 5 and 10 years performanace. I found something interesting: most funds could not beat its bench index consistently. For instance, Vanguard Explorer Fund and its bench mark is listed below:
Average Annual Returns—Updated Monthly as of 11/30/2007
|1 Year||3 Year||5 Year||10 Year|
|Explorer Fund Investor||5.53%||9.71%||14.24%||9.44%|
|Russell 2500 Growth Index||9.52%||11.79%||15.93%||6.60%|
I found Vanguard Intl Value fund to be an exception. Vanguard Winsor II also faired well. I left out fund such as Vanguard Prime Cap Core, because it does not have 5 years track record.
Besides past performance, I put equal weight on International and US market because I think the US capital market will losing its share globally, just like the US economy (GDP) has a less percentage on global economy.
As a side note, I found many Vanguard funds are managed by other smaller advisories. Some of them have been in business for 40 years. I think as Chinese goverment reforms social security, it may move toward something like the 401K in the US. That would give the China mutual fund industry a big boost as I think managing people’s retirement money is both chanllenging and rewarding 🙂