Investors in search of a Large Cap Value fund might want to consider looking at Vanguard Value Index Admiral (VVIAX). VVIAX has no Zacks Mutual Fund Rank, but we have been able to look into other metrics like performance, volatility, and cost.
VVIAX is classified in the Large Cap Value segment by Zacks, which is an area full of possibilities. Investors interested in a stable income stream find these mutual funds very appealing because they have a unique investing strategy. Large Cap Value funds invest in stocks with a market capitalization of $10 billion or more, but whose share prices do not reflect their intrinsic value. This tactic often leads to low P/E ratios and high dividend yields; however, these funds’ high growth opportunities are often slowed, as large-cap securities are generally in stable industries with low to moderate growth prospects.
Vanguard Group is based in Malvern, PA, and is the manager of VVIAX. Vanguard Value Index Admiral made its debut in November of 2000, and since then, VVIAX has accumulated about $39.67 billion in assets, per the most up-to-date date available. A team of investment professionals is the fund’s current manager.
Obviously, what investors are looking for in these funds is strong performance relative to their peers. This fund has delivered a 5-year annualized total return of 15.39%, and is in the middle third among its category peers. Investors who prefer analyzing shorter time frames should look at its 3-year annualized total return of 13.12%, which places it in the middle third during this time-frame.
It is important to note that the product’s returns may not reflect all its expenses. Any fees not reflected would lower the returns. Total returns do not reflect the fund’s [%] sale charge. If sales charges were included, total returns would have been lower.
When looking at a fund’s performance, it is also important to note the standard deviation of the returns. The lower the standard deviation, the less volatility the fund experiences. VVIAX’s standard deviation over the past three years is 12.18% compared to the category average of 12.62%. The standard deviation of the fund over the past 5 years is 14.98% compared to the category average of 14.04%. This makes the fund more volatile than its peers over the past half-decade.
Investors should not forget about beta, an important way to measure a mutual fund’s risk compared to the market as a whole. VVIAX has a 5-year beta of 0.83, which means it is likely to be less volatile than the market average. Alpha is an additional metric to take into consideration, since it represents a portfolio’s performance on a risk-adjusted basis relative to a benchmark, which in this case, is the S&P 500. The fund has produced a positive alpha over the past 5 years of 0.42, which shows that managers in this portfolio are skilled in picking securities that generate better-than-benchmark returns.
For investors, taking a closer look at cost-related metrics is key, since costs are increasingly important for mutual fund investing. Competition is heating up in this space, and a lower cost product will likely outperform its otherwise identical counterpart, all things being equal. In terms of fees, VVIAX is a no load fund. It has an expense ratio of 0.05% compared to the category average of 0.94%. Looking at the fund from a cost perspective, VVIAX is actually cheaper than its peers.
While the minimum initial investment for the product is $3,000, investors should also note that each subsequent investment needs to be at least $1.
Fees charged by investment advisors have not been taken into consideration. Returns would be less if those were included.
For additional information on this product, or to compare it to other mutual funds in the Large Cap Value, make sure to go to www.zacks.com/funds/mutual-funds for additional information. Want to learn even more? We have a full suite of tools on stocks that you can use to find the best choices for your portfolio too, no matter what kind of investor you are.
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This article originally published on Zacks Investment Research (zacks.com).