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Advice on a Large Cap Index Mutual Fund
Old 04-20-2011, 11:51 AM   #1
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Advice on a Large Cap Index Mutual Fund

I recently sold mutual fund shares in Janus 20 (JNFTX) and AIM Large Cap Basic Value (LCINX). They both are actively managed funds with high expense ratios and were underperformers.

I want to keep the same asset allocation on my portfolio that I had before the sales. I had both of these funds identified as Large Cap, I do not further break down by growth or value.

I want to find a replacement(s) for these funds. I want a large cap fund, preferably an index fund, with a low expense ratio and good performance. I have accounts with T. Rowe Price and Vanguard. Here are a few that I am looking at- TRP Equity Index 500 (PREIX); Vanguard 500 Index Fund (VFINX); Vanguard Large Cap Growth (VIGRX); and Vanguard Large Cap Value (VIVAX). Can you recommend these or any others that meet these criteria? Thanks.
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Old 04-20-2011, 12:00 PM   #2
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They are all good.

The Vanguard 550 index and the T Rowe Price 500 index invest in the same basket of equities. The Vanguard fund has a lower expense ratio though.

The growth and value index funds divide the 500 index into (Lipper defined) baskets of growth funds versus value funds. They both should do well over very long periods of time. As the market goes through the business cycle either growth or value funds do better. But over long periods of time they both seem to do about the same.

Your Asset allocation should hold either a broad based index, or some of growth and some of value funds. Your AIM Large Cap Basic Value (LCINX) is roughly equivalent to the value index. I don't know what the janus fund is. Perhaps it is a growth fund that could be modeled by the growth index fund.
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Old 04-20-2011, 12:14 PM   #3
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Originally Posted by midnighter777 View Post
I recently sold mutual fund shares in Janus 20 (JNFTX) and AIM Large Cap Basic Value (LCINX). They both are actively managed funds with high expense ratios and were underperformers.

I want to keep the same asset allocation on my portfolio that I had before the sales. I had both of these funds identified as Large Cap, I do not further break down by growth or value.

I want to find a replacement(s) for these funds. I want a large cap fund, preferably an index fund, with a low expense ratio and good performance. I have accounts with T. Rowe Price and Vanguard. Here are a few that I am looking at- TRP Equity Index 500 (PREIX); Vanguard 500 Index Fund (VFINX); Vanguard Large Cap Growth (VIGRX); and Vanguard Large Cap Value (VIVAX). Can you recommend these or any others that meet these criteria? Thanks.
VFINX is a blend of growth and value and is basically "the market". See the M* link here and try to get familiar with the style map picture: VFINX Vanguard 500 Index Investor, mutual funds, quote, price - Morningstar

Now look at the style maps for VIGRX and VIVAX by typing those in the "quote" box on the M* link above. Notice that VIGRX is centered on large growth and VIVAX is centered on large value. Historically VIVAX has captured the "value premium" which is estimated to be about 2%. You can read about that kind of thing over at the Bogleheads site where the topic is endlessly debated.

Hope that helps.
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Old 04-20-2011, 01:17 PM   #4
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You missed the Vanguard Large Cap Index fund. I own it. Also the Vanguard Total Stock Market Index fund would work since it is mostly large cap.

I don't see how performance has anything to do with picking an index fund. Once you select the asset class you want, you want the index fund with the lowest possible fees, most tax-efficiency, and no tracking error. The two funds I mentioned, fit the bill.
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Old 04-20-2011, 02:17 PM   #5
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I don't see how performance has anything to do with picking an index fund. bill.
+1

Hey, you said, I didn't!!
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Old 04-21-2011, 06:41 AM   #6
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+1

Hey, you said, I didn't!!
Maybe alpha would be a better term to use, however, I'm ok with performance. Indexing and rebalancing liberate the investor from worrying about performance and market timing. It's a philosophical mind set that leads to investing success and low blood pressure.

To the OP any Large Cap Index fund should have the same "performance" so just choose on lowest expenses.
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