You don't want to own too many funds that are similar, but how do you tell? A high correlation between funds may mean that your portfolio of funds is not as diverse as you might want it to be. While other tools may compare funds only to the S&P 500 (or 500 Index fund), you can use this tool to determine how closely the performance of one Vanguard stock fund tracks that of any other Vanguard stock fund. Compare all the funds that you own. To diversify, look for funds that have low correlation with one another.
You must select two funds on which to draw a correlation.
Check another correlation.
Sell. This fund of funds tracks the Morgan Stanley EAFE index by investing in European Index (currently about 70% of assets) and Pacific Index (the remaining 30%). It's similar to Tax-Managed International, which tracks the same index, though that fund buys stocks directly and comes with a higher minimum and more onerous back-end loads. Performance for the two has been virtually identical. Yet both ignore the emerging markets component that one finds in Total International or World ex-U.S. Index. And there's the rub. If you buy into the indexers' credo that one should index "all" markets rather than a slice of the pie, then this fund is a non-starter.
| Models | October | Year to Date |
| Growth | -2.4% | 23.0% |
| Conservative Growth | -2.1% | 19.1% |
| Income | -0.4% | 16.5% |
| Growth Index | -2.7% | 22.5% |
| The average Vanguard investor |
-1.3% | 13.8% |
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