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I dont often look at mutual fund teasers, but there are several folks out there who write newsletters advising on mutual funds which makes sense, since there are many more mutual funds than there are US-listed companies (not counting all the pink sheet and OTC fellas). Some of them even focus specifically on one of the big fund families like Vanguard or Fidelity and advise their subscribers about how and when to move in and out of various funds in those families.

I personally wouldnt ever subscribe to one of these I think the free services for screening mutual funds (or cheap ones, like Morningstars), and the excellent magazine annual reports on mutual funds, provide plenty of ways to easily select appropriate funds for yourself, but I can certainly see that some folks would like the very direct hand-holding service. Investing in mutual funds is almost always much less risky than investing in individual stocks, of course, so I dont feel like I need the expertise of a newsletter to steer me away from fund risk, and the things I really hate, like high fees and newbie managers, are pretty easy to suss out on your own.

That said, the Gumshoe is an equal opportunity sleuth and a reader forwarded me an email from by Dan Wiener, who puts out The Independent Adviser for Vanguard Investors, teasing us about Three Mutual Funds Vanguard Wants to Keep Secret. (Sale price at the moment is $100 a year, should you wish ). And to be fair, though this isnt the kind of service that interests me, he does claim to significantly outperform the average Vanguard investor. And I do have some Vanguard funds in one of my retirement accounts.

So what are these three secret funds? And why on earth would Vanguard want to keep them secret?

#1: The Best Safe Haven for 2007

This one keeps 30-40% in bonds, has beaten the S&P of late, and had only one bad year recently, a 6.9% decline in 2002.

And it is Vanguard Wellington (VWELX).

Ive had money in this fund myself (though no longer do I moved that particular pot of money to Dodge and Cox, another excellent low cost shop), and I cant come up with a single bad thing to say about it. If you want a growth/income fund with bond exposure and very low risk, cant argue with Wellington.

Though Im not inclined to agree that having a big slug of bonds in your portfolio right now reduces the kind of risks Im most worried about.

Im guessing I wont be able to poke holes in any of these three funds, since the best of Vanguards funds match up nicely with anyone, but lets keep going and see.

#2— for High Growth Now!

Thats quite a promise, and probably a more compelling one for the many Gumshoe readers who like a little risk with their (higher) returns. Whats the fund?

This is intimated to be a spin off fund of Vanguard Health Care, which is a market-whalloper that also is closed (and had massive minimum investments before it closed a couple years ago).

If Vanguards really keeping this one secret, theyre doing a heckuva job. Im not entirely certain what the solution to this one is.

I assume hes not talking about the Vanguard Health Care ETF, since that just follows the MSCI index and doesnt have Ed Owens great mangement behind it. If youre going to talk about Vanguard Health Care being one of the great mutual funds, its not just because its focused on health care the greatness of the fund must be attributable to Edward P. Owens and his team of analysts at Wellington (yes, the same Wellington Management that subadvises the Vanguard Wellington Fund, and many other funds for Vanguard and others).

So if its not the Vanguard ETF than its not reasonable to say its a Vanguard fund at all as far as I can tell, Vanguard doesnt have any other funds that have appreciable investments in health care far beyond the size of the sector. Certainly not any other actual sector funds. Ive seen this adviser recommending an Icon Healthcare fund in the past, but that would be a stretch since thats a quant fund that dont really use fundamental management (and thus, couldnt really be compared fairly to or favorably with, in my opinion Vanguards fund).

But maybe its another Ed Jones fund or one that has one of his lieutenants as the manager. Thats probably possible if youre Canadian, you can get his expertise through the Talvest fund, also managed by Owens (info here ) and soon to be rebranded with the Renaissance name, but Im sure thats not whats being teased in this ad (and its waaaaay more expensive than the Vanguard one, if memory serves).

If its some other health care fund that happens to be managed by Wellington then I give up. I dont know of any, they subadvise to hundreds of fund families, and its too much of a pain to search. Im pretty sure Owens himself doesnt manage any other health-focused funds that are available to US investors, and anything less than that seems like cheating. If anyone else has the solution to this, share away!

#1 — the Best Fund for Retirement

If you could buy just one Vanguard fund —- or indeed, one fund in any family -— get this one.

Well, I think few folks end up having less than one mutual fund in their portfolio so we really oughtta figure this one out if we believe our friendly adviser at all.

He says that the manager of this fund has extraordinary discipline, resisted the urge to invest in technology in the late-90s, and could be Warren Buffetts long-lost brother.

The fund has had an annual return averaging 17.1% over the last three years, and was up 19.1% in 2006.

In our advisers words, As you can tell, I admire this manager hugely. Ive studied him all through the 1990s, and he never strayed from very clear principles. I put a great deal of my own money my familys money and the money of my wealthiest clients into this managers fund.

Im assuming hes talking about Jim Barrow here, a longtime adviser for Vanguard funds including Windsor II (which I have some money in) but its not Windsor II, which unfortunately hasnt performed quite that well lately. This fund has to be

Vanguard Selected Value (VASVX)

This does look like a pretty stubborn deep-value fund, and something along those lines probabl should have a place in many portfolios. I dont know that this is much better or worse than higher profile value funds (my mutual fund holdings that could be called value are with Third Avenue and Dodge and Cox, aside from Windsor II), but its definitely cheaper than almost all of them. Theyre pretty heavily weighted in financials, utilities, and business services, for what thats worth.

It also has gotten the stay away treatment from Vanguard, with a lift in the minimum investment to $25,000. Thats the last step before they close the fund, usually, so if you love this one I suppose nows the time.

So the Gumshoe takes a little walk in Mutual Fund world. I gotta tell you, its much more boring, many fewer snakes and worms under the rocks. And compared to the hyperbole of the stock teasers, this one made me feel a little drowsy.

Let us know if youve got strong feelings about any of these or you have a better idea than I of what theyre talking about with that odd Vanguard Health Care Spin-off tease.

And have a lovely day.

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