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Take Buffett’s Advice: 5 Vanguard Funds to Buy

These low-cost Vanguard funds follow Buffett's suggestions for smart investing

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Take Buffett’s Advice: 5 Vanguard Funds to Buy

Vanguard Funds Mutual Fund #2 — Vanguard Mid-Cap Index Fund Admiral Shares (VIMAX)

Vanguard Take Buffetts Advice: 5 Vanguard Funds to BuyAllocation: 20% of Portfolio
YTD Performance:
3.4%

The VFIAX covers off the large-cap portion of the portfolio quite nicely. While Buffett might not be fond of mid-cap stocks being added to the mix, evidence suggests mid caps outperformed large-cap stocks over a four-year period between 2009 and 2013.

In fact, John Hancock published a report in 2012 that cautions investors about underweighting mid caps because of an assumption that a large-cap fund combined with a small-cap fund will do the job. That’s simply not the case.

Mid-cap stocks tend to provide an attractive combination of risk and reward. For this reason, I recommend the Vanguard Mid-Cap Index Fund Admiral Shares (VIMAX), which tracks the CRSP Mid Cap Index, an index composed of stocks that fall between the top 70%-85% of investable market capitalization. The average company in the index has a market cap of $8.2 billion.

They’re big enough to survive an economic hit but small enough to still be growing. With an expense ratio of 0.1%, this entry on our list of Vanguard funds is giving you safety and performance in one. Top holdings include Forest Laboratories (FRX) and Illumina (ILMN).


Article printed from InvestorPlace Media, http://investorplace.com/2014/03/5-vanguard-funds-warren-buffett/.

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