This Week's Fund Focus

In this edition of Fund Focus, Jim takes a look back at this week in the markets and the first quarter coming to an end. Then, Dan takes an in-depth look at Dividend Growth (VDIGX).

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Fidelity Market Flash: Q1 Comes to a Close

By Jim Lowell
Jim Lowell's Fidelity Investor

The end of the first quarter marks a breadth of solid to significant gains across capitalizations and regions, with a narrowed torrent surging in small and mid-cap streams. Value stocks saw an overall resurgence.

Fearing stimulus-related inflation, bonds suffered their worst quarterly performance in decades, making them a lower priced/higher yielding instrument to help bolster defense at a discount.

In fact, in the past few months, we’ve seen a shift in the decadal momentum favoring growth tech stocks mainly to momentum favoring more traditional value stocks…

So much so that it is fast becoming difficult to find value stocks at discounted prices, which is especially true in the S&P 500’s basket where growth’s rising tide floated the price of all value boats within it.

This week, prices generally rose, although we began the week with heightened threats; from Europe’s third wave coronavirus surge to a more classic kind of global market scourge in the form of a family office hedge fund making not just outsized, but gargantuan bets on margin that went so badly against the fund that they were forced to liquidate to the point where headlines were worrying about an overall meltdown.

And while the former threat wasn’t new, its tireless progression to the current stages of lockdowns across Europe reflects the human and economic toll of not preparing well and practicing what we know works—from distancing to mask-wearing, to vaccinations.

The wall between what is known to work and what is not practiced is a high hurdle for all countries, but if you bang your head against a wall, it’s going to hurt more and more every time you bang your head against it.

Even as market prices remain elevated, home prices continue to skyrocket. Consumer confidence is lofty, too.

Today: Car sales, construction spending and manufacturing activity gauges.

Next week: Service sector activity gauges, factory orders, FOMC minutes, job openings, trade deficit and consumer credit.

For my full analysis on the markets, inside scoops, model porfolios and all things Fidelity—sign up to become a Fidelity Investor member today!

Vanguard Fund Review: Dividend Growth (VDIGX)

By Dan Wiener
The Independent Adviser for Vanguard Investors

Classic growth-and-income value manager Donald Kilbride's disciplined approach has resulted in market-beating returns for Dividend Growth (VDIGX) shareholders since he took the reins nearly 15 years ago.

Investors paid attention and threw enough dollars at the fund that Vanguard closed its doors in 2016—long after we recommended it. Three years later, Vanguard reopened the fund to all comers.

Kilbride has proven his worth over the full market cycle. Since taking the helm, he has beaten the stock market while taking on less risk, and he's outpaced his index bogey.

Since April 2006, Dividend Growth has gained 317.8%, while 500 Index (VFIAX) returned 288.3% and Dividend Appreciation Index (VIG) gained 278.0%.

The fund's -38.0% MCL during the credit crisis was one of the smallest of Vanguard's stock funds.

However, don't expect Kilbride to win the performance derby every year.

His defensive abilities were on display when the pandemic struck, falling 17.3% in the first quarter to 500 Index's 19.6% decline. But in the subsequent three quarters, Dividend Growth trailed as the market rallied, 35.5% to 47.2%.

You can’t stop market volatility, but you can get out of its way. All you need are the names of Vanguard’s Safe Havens.