Looking For Fund Outperformance? Here Are 39 Funds To Consider

Summary

With so many mutual funds/ETFs, it is hard to choose although many investors are restricted if they are only investing through their work retirement plan.

While investment returns across different funds will be variable from year to year, funds with long-term performance excellence are likely most desirable.

An analysis of the performance of the biggest Vanguard funds reveals that a overwelming majority do better than the average returns of other big funds.

The degree of outperformance of both Vanguard stock and bond funds is large enough that many investors in sub-performing funds might want to consider other options.

Readers of my Seeking Alpha articles (as well as my Newsletter) will likely have observed that I have a preference for Vanguard funds. The reasons: very low cost, good customer service, readable reports, and most of all, excellent performance, as you will see below.

I realize that not everyone may have access to Vanguard funds if their only investments are through their workplace retirement plans. Therefore, they may feel there is no way to adopt my suggestions as to recommended funds. What to do in such instances remains a challenge although I have a few ideas.

If your investing is restricted to just your employer's retirement plan, you might consider what it will take to possibly begin investing outside those plans. If you have any spare cash, you could start by setting up one or more investments in a separate account, picking any funds you choose, including from Vanguard.

Once you are ready to retire, you could roll over retirement assets into other fund groups. For example, when I retired, I arranged for my 401(k) assets to be rolled over, tax-free, from Fidelity into a Vanguard IRA.

Short of these options, you may want to do a little research to see which funds you currently do have available that have been doing roughly equal or better than my recommended funds. (See my listing of "Recommended Funds" here.) Such comparisons should look for funds that are in a similar category as my recommendations. For example, it would not make sense to compare a domestic Large Growth fund to an International fund because category returns will normally differ widely across different categories, not because one fund in a given category is inferior, but because there are different conditions affecting returns, say in Europe, than in the US.

A tool for doing such comparisons is readily accessed through performance data on each fund at morningstar.com. Another valuable resource can be found here which is particularly useful for examining the returns of multiple funds in a portfolio all at the same time.

If you determine that your funds are trailing the returns of my recommendations (which, however, certainly won't always be the case), you might either just accept these differences, or, use Morningstar's "Fund Category Performance" table found here to find better performing funds. (Click on any given fund category name to get a list of all funds in that category and their comparative performances.) (Note: While good past performance doesn't guarantee good future performance, it is one of the best indicators investors have, especially if out/under-performance is considered over 10 years or more.

Although it would be impossible to compare the performance of Vanguard funds to other fund companies in this single article, I have created the table below which was drawn from a list of the 250 biggest of all funds based on total assets, selecting those Vanguard funds included in the list. (Identical funds of different fund classes and balanced funds consisting of both stocks and bonds are excluded.) The periods of comparison are 1 and 5 years.

Biggest Vanguard Stock Funds

Fund (Fund Symbol) FundCategory 1 Yr Ret.for Fund 1 Yr Avr. Ret.for Category 5 Yr Ret.for Fund 5 Yr Avr. Ret.for Category

- Total Stock Mkt Idx Adm (VTSAX)

- 500 Index Admiral (VFIAX)

- Div Growth Inv (VDIGX) (closed)

- Tax-Managed Capital App Adm (VTCLX)

Large Blend

8.99

10.38

19.04

10.11

8.22

10.17

10.68

11.30

10.59

8.67
- Capital Opp Adm (VHCAX) (closed)

Mid-Cap Growth

4.91 10.47 11.72 9.90
- Emerging Mkts Stock Idx Adm (VEMAX)

Emerging Mkts

3.22 2.58 2.26 1.80

- Equity-Income Adm (VEIRX)

- Value Index Adm (VVIAX)

- Windsor II Adm (VWNAX)

- Windsor Adm (VWNEX)

Large Value

9.73

9.87

7.07

1.82

5.83

9.01

9.26

7.07

6.25

6.85

- Explorer Adm (VEXRX)

- Small Cap Growth Index Adm (VSGAX)

Small Cap Growth

7.09

6.79

3.33

10.01

8.98

9.25

- Extended Market Index Adm (VEXAX)

- Mid Cap Index Adm (VIMAX)

Mid-Cap Blend

2.04

7.83

2.63

7.80

8.82

5.94

- Growth Index Adm (VIGAX)

- PRIMECAP Adm (VPMAX) (closed)

- US Growth Adm (VWUAX)

- PRIMECAP Core Inv (VPCCX)

Large Growth

10.44

6.19

11.72

6.99

10.26

11.98

12.06

13.51

10.98

11.30
- Health Care Adm (VGHAX)

Health Care

7.36 6.19 8.33 9.28
- International Growth Adm (VWILX)

Foreign Large Gr.

-0.40 3.39 6.78 4.12
- Real Estate Index Admiral (VGSLX)

Real Estate

12.21 10.33 7.69 7.11
- Small Cap Index Adm (VSMAX)

Small Cap Blend

2.26 -3.89 7.72 5.70
- Small Cap Value Index Adm (VSIAX)

Small Cap Value

-1.56 -8.11 6.61 3.56

- Total Intl Stock Index Adm (VTIAX)

- Developed Markets Index Adm (VTMGX)

Foreign Large Blend

0.64

-0.02

0.52

2.33

2.53

1.97
- International Value Inv (VTRIX)

Foreign Large Value

-0.39 -1.10 1.27 0.08

Note: 5-Yr return is annualized; results through 6/30/19

While the above table includes a large amount of data, the key is how many of the biggest Vanguard funds come out ahead of the average returns for a given fund category. Whenever a Vanguard fund has exceeded its category average, the return is shown in bold or dark text.

Out of the 26 funds, 24 exceeded the category average for either 1 or 5 years, or both. The average outperformance has usually been at least one or two percent per year, with some funds showing considerably more than that.

Biggest Vanguard Bond Funds

Fund (Fund Symbol) FundCategory 1 Yr Ret.for Fund 1 Yr Avr. Ret.for Category 5 Yr Ret.for Fund 5 Yr Avr. Ret.for Category

- CA Interm-Term Tax-Exempt Adm (VCADX)

- Interm-Term Tx-Ex Adm (VWIUX)

Muni Intermediate

6.09

6.44

5.94

3.25

3.26

2.99

- High-Yield Tax-Exempt Adm (VWALX)

- Long-Term Tax-Exempt Adm (VWLUX)

Muni Long

7.50

7.28

6.43

4.87

4.34

3.68

- Ltd-Term Tx-Ex Adm (VMLUX)

- Short-Term Tx-Ex Adm (VWSUX)

Muni Short

3.88

2.34

2.92

1.68

1.09

1.17
- High-Yield Corporate Adm (VWEAX)

High Yield

8.98 6.22 4.80 3.51

- Interm-Term Bond Index Adm (VBILX)

- Interm-Term Investment-Gr Adm (VFIDX)

- Total Bond Market Index Adm (VBTLX)

Interm Bond

9.99

9.62

7.85

7.21

3.44

3.64

2.89

2.53
- Long-Term Investment-Grade Adm (VWETX)

Long-Term Bond

14.77 12.83 6.19 5.39

- Short-Term Bond Index Adm (VBIRX)

- Short-Term Investment-Grade Adm (VFSUX)

Short Term Bond

5.22

5.48

4.15

1.74

2.26

1.58
- GNMA Adm (VFIJX)

Interm Govt

5.74 5.99 2.48 1.94
- Vanguard Inflation-Protected Adm (VAIPX)

Inflation.

4.74 4.06 1.69 1.21
- Total Intl Bd Idx Adm (VTABX)

Internat Bnd

7.81 5.41 4.31 0.63

Note: 5-Yr return is annualized; results thru 6/30/19

As with the stock funds, almost all Vanguard bond funds exceeded their identical category averages. In this case, this is true for 15 out of 16 funds. The average outperformance appears to be about 1% per year.

The results shown in the above two tables, including both index and managed funds, are unlikely to be equaled or beaten by any large fund group. So it's easy then to see why I prefer Vanguard funds over most others.

Disclosure: I am/we are long MANY OF THE FUNDS MENTIONED. I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it. I have no business relationship with any company whose stock is mentioned in this article.