Wiener: the Best Fund You Can Buy

09/05/2002 12:00 am EST


Daniel Wiener

Editor, The Independent Adviser for Vanguard Investors

Dan Wiener’s The Independent Adviser for Vanguard Investors is a specialized service providing advice on Vanguard mutual funds.  Dan currently considers Vanguard Health Care a buy. Here’s his review.

“For all the talk of a horrible year in the healthcare industry, fund manager Ed Owens has been able to keep the carnage under control at Vanguard Health Care. Through the end of July, the Dow Healthcare index was down 20.6% and the S&P Global Healthcare Index was off 17.1%. Meanwhile, Vanguard Health Care lost 9.8% for the same period, which in absolute terms may not look great, but in relative terms is simply fabulous. I’d also remind investors that the fund's long-term numbers place it leagues ahead of the competition and ahead of most equity funds as well.

Why has Owens been so successful?  Two reasons. First, he runs a diversified portfolio.  He doesn’t load up on biotech to the exclusion of other sectors, nor does he ignore the HMOs and medical technology companies. If generics are taking share from traditional pharmaceutical companies, Ed will find the best ones and buy them. Yes, this portfolio owns some of everything. Plus, Owens looks for opportunities overseas as well as at home. He currently has about 20% of the fund in foreign companies. But diversification would be useless without stellar stock picking, and that’s the manager’s other secret weapon. Hence, his out-performance and great long-term returns.

With this fund, we believe we will just keep making money over time with low risk and high returns. Owens’ ability to navigate through an industry that represents more than 15% of GDP makes this one of the best mutual funds available – period. And, with stock prices down, Ed’s finding plenty of pickings for the fund. Investing in the healthcare sector is one of the smartest moves you can make if you’re interested in long-term growth. Vanguard Health Care should be a part of most anyone’s portfolio and is particularly appealing for young investors, including children. My entire family owns a ton of this fund. My private money-management clients do as well. 

Remember, this fund sports a $25,000 minimum, but it’s worth it. If you’re not already a shareholder don’t delay; Vanguard has closed the fund in the past, they could easily do it again, without notice. I would also note that the fund charges a 1% back-end loan when you redeem shares held less than five years.  But why would you sell?”

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