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VGHCX- Vanguard's Health Care Fund is open again...is it worth it?
Old 08-10-2008, 07:21 PM   #1
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VGHCX- Vanguard's Health Care Fund is open again...is it worth it?

https://personal.vanguard.com/us/Van...S_CO_AM_AO.jsp


I know a few people were inquiring about the health care fund a while back....and since this is a sector I dont see slowing down, I think I might start buying into that one!
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Old 08-11-2008, 05:47 AM   #2
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We've had this fund as part of our retirement portfolio a bit over 15 years. While the returns of late have not been great, they are still better than the majority of funds we hold (-1.85% YTD a/o Aug 8th) .

At one time (in our early accumulation years), this single fund accounted for around 50% of our combined retirement portfolio, dropping over the years to our current 6.5% as we "spread our bet" over the years.

The reason we invested heavily in the early years was due to the fund manager Ed Ownens, who has been with Wellington Management over 30 years. The fund did well under his management style, even through the "scares" of public pharma management under previous administrations (remember Hillary failed attempt under her husband?)

More importantly, we keep the fund based upon the aging of the boomer population. As one who is part of this "surge", I/DW have increased our medications over the years, and don't think the general population is getting "healthier".

A lot of folks don't like pharma (regardless of specific fund) saying that the government will "take over" either distribution or pricing of drugs. IMHO, this is not a problem. If they manage distribution/pricing, you will see an increase in the amount of drugs distributed and profits will be kept up by quantity (if not quality) of drugs dispensed. As far as new drugs, there is a possibility that there might be fewer coming on-line, but remember, most drug development is done by smaller companies (who get acquired by large pharma). Personally, I don't see that going away.

With a new manager being added to the fund this year (assuming Ed will retire), the "quality of management" has three options - better/worse/same. Will that affect the fund? Don't know. Are we reducing our holdings (even though shown as "over invested" in most retirement planning tools)? Nope.

Anyway, that's my response to the OP's comment.

- Ron
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Old 08-11-2008, 08:37 AM   #3
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What about IYH? It has been doing pretty well lately, it has been gaining for the past month, at the moment it is my favorite health care investment. I have been feeling like health care is a smart industry to invest in with the high percentage of Americans reaching retirement age. If you are interested, you can check it out here IYH - Dow Jones U.S. Healthcare Sector Index Fund | ETF MarketPro
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Old 08-11-2008, 08:55 AM   #4
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Its a smart industry to invest in, providing we dont get a nationalized health care plan put in place that puts a big squeeze on everyones profits.
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Old 08-11-2008, 10:19 AM   #5
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https://personal.vanguard.com/us/Van...S_CO_AM_AO.jsp


I know a few people were inquiring about the health care fund a while back....and since this is a sector I dont see slowing down, I think I might start buying into that one!
Darn!!! Just tried to swap some VGAHX (which I am overweighted on) to VEXPX through Schwab....no dice. Schwab is still talkin' to Vanguard to let them trade those funds on its website. I have to adjust some of my AA to small caps.
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Old 08-11-2008, 06:48 PM   #6
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Darn!!! Just tried to swap some VGAHX (which I am overweighted on) to VEXPX through Schwab....no dice. Schwab is still talkin' to Vanguard to let them trade those funds on its website.
Have you tried the ETFs ? Schwab was happy to let me trade the
ETF version of health-care fund.
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Old 08-11-2008, 07:52 PM   #7
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There are two versions of the vanguard health care 'fund'. The ETF points to an index that bears very little resemblance to the vanguard health care mutual fund. Two totally different things.
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Old 08-12-2008, 07:37 AM   #8
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We are getting older and fatter. I think it's a good bet.

Besides, why not get into it for the minimum to hold a place just in case you want to add to it later.
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Old 08-12-2008, 01:13 PM   #9
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There are two versions of the vanguard health care 'fund'. The ETF points to an index that bears very little resemblance to the vanguard health care mutual fund. Two totally different things.
Well, I'll be dipped in doo-doo. Thanks for the heads-up.
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Old 08-12-2008, 01:23 PM   #10
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I sold this fund in a taxable account this spring after getting walloped with capital gains taxes. I would have bought it back in an IRA, but couldn't due to it being closed. It certainly has had a good long term return.
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Old 08-12-2008, 02:11 PM   #11
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Well, I'll be dipped in doo-doo. Thanks for the heads-up.
No trouble, its rather confusing. You'd think that vanguards ETF's were analogs of their mutual funds, but in many cases they're rather different beasts with very different holdings. For a while there I thought vanguard was specifically pointing out in bold type that they werent the same things, but I dont see that anymore.

Theres very little correlation between the top ten holdings of the health etf and the healthcare fund. They do seem to show similar volatility and the etf is actually outperforming the fund lately.
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Old 08-12-2008, 07:40 PM   #12
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They do seem to show similar volatility and the etf is actually outperforming the fund lately.
There's only one reason that managers re-open their fund, and it's never a good reason for the investors. If I was a current VGHCX customer I'd take this as a signal to significantly harvest the gains.

The fact that the manager is approaching Vanguard's retirement age is another warning sign.
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Old 08-13-2008, 07:51 AM   #13
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If I was a current VGHCX customer I'd take this as a signal to significantly harvest the gains.

The fact that the manager is approaching Vanguard's retirement age is another warning sign.
Gee - can't do that (since it's in all tax deferred accounts).

BTW, Ed Owens (I believe) is a former sub driver? Anyway, as an USAF vet, I can't endorse his previous "experience" (as for myself - I'm willing to tell you some tales ).

- Ron
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Old 08-13-2008, 06:19 PM   #14
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Gee - can't do that (since it's in all tax deferred accounts).
What I mean is that I'd sell the shares and put the money in some other asset class or a money market. Considering that it's tax-deferred I'd pull the trigger even faster.

And if you're trusting in a submariner's nuclear-engineering mentality to take care of you-- good luck with that!
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Old 08-26-2008, 07:35 AM   #15
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Finally!

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Darn!!! Just tried to swap some VGAHX (which I am overweighted on) to VEXPX through Schwab....no dice. Schwab is still talkin' to Vanguard to let them trade those funds on its website. I have to adjust some of my AA to small caps.
Today I was able to swap 25K of VGAHX to VEXPX through internet trading at Schwab. Now I also have some small cap for my AA.
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