American Funds Vs. Vanguard, Here We Go!In a recent Bloomberg article, it was cited that American Funds has seen tremendous drop in assets in their largest holding Growth Fund of America, at the hands of low-cost indexing, or namely Vanguard.
My take: the 31% drop in American Funds assets/Growth Fund of America, is due to lack of investor-advisor confidence. 2008 showed investors that most advisors ARENT looking out for their best interests and hence they are flocking to a DIY model (at Vanguard and other indexing shops). Its unfortunate, because at Vanguard those investors will be harmed, yet again, WHEN the next selloff occurs; first the investors that need the most help will be hurt—those soon-to-be retirees or retirees invested in Vanguard Bond funds, and then those investors passively sitting in Vanguard’s S&P 500 Index fund (remembering that these peeps lost 37% in 2008).
Its time American funds and the investment industry starts championing quality advisors who act as fiduciaries as they ACTIVELY manage their clients’ assets. Bogle and Buy and Hold is harmful—not recommended. Did you Buy and Hold in 2008? Will you do it again? Didn’t think so—make sure you factor in lost sleep and blood pressure meds to that strategy’s COST.
For you BUY AND HOLD proponents (who are assuredly sleep deprived and on BP meds, or will be in…say 12 months) here is some great research to advocate for active/tactical investing. Dip your toe and Get Liberated—and sleep well.