Q: My holdings of Vanguard Global Equity Fund haven’t done great. What do you think of this fund?
R.R., via the Internet
A: Keep in mind that this is a world fund, meaning that its holdings include U.S. issues. With more than one-third of assets in U.S. stocks, this might not be the fund for you if it overlaps with your domestic holdings.
But it does have a low annual expense ratio of 0.64 percent, reasonable for a world stock fund. Low price is the trademark of the Vanguard Group.
The $6.9 billion Vanguard Global Equity Fund is up 4 percent over the past 12 months to rank at the midpoint of world stock funds. Its three-year annualized return of 12 percent puts it in the top one-third of its peers.
“We recommend this as one of the best global equity funds around,” said Annie Sorich, analyst with Morningstar Inc. in Chicago. “When a fund has several subadvisers, as this one does, it can start to look like an index, but that hasn’t been the case here and its system is working.”
The bulk of the fund’s assets have been managed by Acadian Asset Management, a quantitative team focusing on value and momentum, since 2004. Long-time subadviser Marathon Management and AllianceBernstein, which was added in 2006, are disciplined value shops that each manage a portion of the fund.
Vanguard Global Equity has been less volatile than many other world stock funds and is diversified around the world. Among its holdings, it has 37 percent in North America, 29 percent in Europe and 20 percent in Japan and the rest of Asia.
Among major concentrations, financial services represents 22 percent of its portfolio, industrial materials 21 percent and energy 12 percent. Top holdings recently were ING Groep of the Netherlands, Research In Motion of Canada, Royal Dutch Shell of the United Kingdom, E.On of Germany, Freeport-McMoRan Copper and Gold in the U.S., Lukoil Co. of Russia, Marathon Oil of the U.S., Nintendo of Japan, Societe Generale of France and Exxon Mobil of the U.S.
This “no-load” (no sales charge) fund requires a $3,000 minimum initial investment.
Q: What exactly is a one-time dividend? Why are they issued and what do they signify?
E.B., via the Internet
A: The biggest special dividend was Microsoft’s $3-a-share dividend worth $32 billion in 2004. Chairman Bill Gates received $3.3 billion from it, which he pledged to the Bill and Melinda Gates Foundation.
A special dividend is a distribution of company assets, usually in cash, to shareholders. According to Standard & Poor’s, there were 628 of these in 2007.
Some speculated that other giant companies might join in after Microsoft took the plunge. But most companies simply pay their regular dividend on a quarterly basis.
“Companies might make an additional, one-time dividend payment in the event of a special situation,” said Howard Silverblatt, senior analyst with S&P. “This is usually when they have excess cash, perhaps from selling a division.”
In Microsoft’s case, the special dividend was issued because it had a lot of cash. It was an effort to appease shareholders who were unhappy about the disappointing performance of the firm’s shares.
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Andrew Leckey is a Tribune Media Services columnist. E-mail him at yourmoney @tribune.com.
