Dan Wiener, Vanguard’s gadfly, has keen eye on investing

Newsletter editor and co-founder of a money management firm uses tart observations to help build his practice.

Dan Wiener, editor of The Independent Adviser for Vanguard Investors and co-founder of Adviser Investments in Newton, Mass., is on a tear lately. Three of the most recent stories from Mr. Wiener:

• “Morningstar’s ‘Fantastic funds’ now just ‘great.’” “Morningstar has revised its list of ‘Fantastic 40’ funds down to a ‘Great 38,’ blaming errors in its expense-ratio screens. And while editor Russ Kinnel [of Morningstar FundInvestor] said ‘most of the list is unchanged,’ that’s being generous. Of the original Fantastic 40, 12 (or 30%) of the funds have been removed while 10 new ones have been added to the list.”

• “Schwab is at it again.” “It’s one thing to advertise that your namesake index is better than someone else’s. But as the fine-print says, ‘Investments that track each of these indexes may have different performance as a result of fees, expenses and tracking error, among other variables.’ No foolin’!”

• “Vanguard disses Bogle forecasts.” “Four members of Vanguard’s Investment Strategy Group led by Joe Davis, Vanguard’s chief economist, and Roger Aliaga-Díaz, chief economist for the Americas, write in a recent paper, ‘Improving U.S. stock return forecasts: A ‘fair-value’ CAPE approach,’ that Jack Bogle’s long-standing formula for predicting future stock market returns has almost no value.”

Mr. Wiener started his newsletter in 1990 and his advisory service in 1994 with Jim Lowell, editor of Fidelity Investor. Adviser Investments now has $5 billion in assets, thanks in part to the voice he brings to the newsletter.

Back in 1990, there were plenty of fund companies Mr. Wiener could have picked: Fidelity, Dreyfus, T. Rowe Price, Scudder (remember them?). Why Vanguard?

“Two or three newsletters were already writing about Fidelity, but no one was writing about Vanguard,” Mr. Wiener said. At the time, he was writing about mutual funds for U.S. News & World Report.

“I had money at Vanguard for the kids,” Mr. Wiener said.

At the time, there was no internet and no cell phones.

“I had access to information that no one else had,” he said. “The average investor could rely only on one thing: Whatever marketing material they got from the fund company.”

Mr. Wiener keeps a Chinese wall between the newsletter and the advisory service, which has large positions in several Vanguard funds.

“We get no advertising from Vanguard, no fees, we don’t take ads, we don’t ask them for people to speak at our conferences,” he said. That gives him the freedom to turn a sometimes acerbic eye on the Valley Forge fund behemoth, such as a January piece detailing Vanguard’s struggles to keep up with its enormous inflows.

He also has a knack for publishing things Vanguard doesn’t — such as Vanguard’s executive compensation. (He estimated that former CEO Jack Brennan’s share of Vanguard’s Partnership Plan payout would have been $21 million in 2016 and founder Jack Bogle’s share would have been $15 million if they had been eligible for a payout that year.)

“It may not be hedge fund money, but it isn’t seaman’s wages, either,” he wrote.

Some of the advisory service’s assets came from fans of the newsletters that Mr. Wiener and Mr. Lowell, the group’s chief investment offer, write. Others have come through acquisitions, such as the February purchase of Braver Wealth Management.

Mr. Wiener is an advocate of low fees, but he said not to let cost wag the tail of the investment. Like many advisers, he believes that time in the market is better than market timing, and that it’s important to be diversified and keep risk at suitable levels.

Unlike Jack Bogle and others, he thinks investing overseas is important. And he’s a fan of managed funds.

“You buy the manager, not the fund,” he said.

He likes one of Vanguard’s best-performing managed funds, Vanguard Dividend Growth (VDIGX), for example, and the PRIMECAP funds — but via PRIMECAP Odyssey funds, not via Vanguard.

Surrounded by 80 employees and what he says is a ridiculous amount of technology, Mr. Wiener tries to stay humble.

“I’m just a pretty face with lots of smart people surrounding me,” he said.