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Investment Grade Bond - Short fund seekers should consider taking a look at Vanguard Short-Term Investor Growth Income Investor (VFSTX - Free Report) . VFSTX has a Zacks Mutual Fund Rank of 1 (Strong Buy), which is based on nine forecasting factors like size, cost, and past performance.
Objective
We note that VFSTX is an Investment Grade Bond - Short option, which is an area loaded with different options. Investment Grade Bond - Short funds focus on the short end of the curve, generally with bonds that mature in less than two years. Fixed income instruments with this maturity level usually have low duration risk, while they also pay out small yields, at least when compared to their longer-dated peers. Additionally, the focus on investment grade will make funds here safer, but yields will be lower than in the junk bond category.
History of Fund/Manager
VFSTX is a part of the Vanguard Group family of funds, a company based out of Malvern, PA. Vanguard Short-Term Investor Growth Income Investor made its debut in October of 1982, and since then, VFSTX has accumulated about $8.62 billion in assets, per the most up-to-date date available. A team of investment professionals is the fund's current manager.
Performance
Obviously, what investors are looking for in these funds is strong performance relative to their peers. This fund in particular has delivered a 5-year annualized total return of 3.18%, and is in the top third among its category peers. If you're interested in shorter time frames, do not dismiss looking at the fund's 3-year annualized total return of 4.04%, which places it in the top third during this time-frame.
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. The standard deviation of VFSTX over the past three years is 2.73% compared to the category average of 10.96%. Over the past 5 years, the standard deviation of the fund is 2.27% compared to the category average of 9.24%. This makes the fund less volatile than its peers over the past half-decade.
With a beta of 0.46, this fund is less volatile than a broad market index of fixed income securities. Taking this into account, VFSTX has a positive alpha of 0.67, which measures performance on a risk-adjusted basis.
Ratings
Investors should also consider a bond's rating, which is a grade ( 'AAA' to 'D' ) given to a bond that indicates its credit quality. With this letter scale in mind, VFSTX has 26.55% in high quality bonds rated at least 'AA' or higher, while 67.28% are of medium quality, with ratings of 'A' to 'BBB'. The fund has an average quality of A, and focuses on high quality securities.
Expenses
Costs are increasingly important for mutual fund investing, and particularly as competition heats up in this market. And all things being equal, a lower cost product will outperform its otherwise identical counterpart, so taking a closer look at these metrics is key for investors. In terms of fees, VFSTX is a no load fund. It has an expense ratio of 0.20% compared to the category average of 0.73%. VFSTX is actually cheaper than its peers when you consider factors like cost.
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.
Bottom Line
Overall, Vanguard Short-Term Investor Growth Income Investor ( VFSTX ) has a high Zacks Mutual Fund rank, and in conjunction with its comparatively strong performance, better downside risk, and lower fees, this fund looks like a good potential choice for investors right now.
For additional information on the Investment Grade Bond - Short area of the mutual fund world, make sure to check out www.zacks.com/funds/mutual-funds. There, you can see more about the ranking process, and dive even deeper into VFSTX too for additional information. If you are more of a stock investor, make sure to also check out our Zacks Rank, and our full suite of tools we have available for novice and professional investors alike.
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Is VFSTX a Strong Bond Fund Right Now?
Investment Grade Bond - Short fund seekers should consider taking a look at Vanguard Short-Term Investor Growth Income Investor (VFSTX - Free Report) . VFSTX has a Zacks Mutual Fund Rank of 1 (Strong Buy), which is based on nine forecasting factors like size, cost, and past performance.
Objective
We note that VFSTX is an Investment Grade Bond - Short option, which is an area loaded with different options. Investment Grade Bond - Short funds focus on the short end of the curve, generally with bonds that mature in less than two years. Fixed income instruments with this maturity level usually have low duration risk, while they also pay out small yields, at least when compared to their longer-dated peers. Additionally, the focus on investment grade will make funds here safer, but yields will be lower than in the junk bond category.
History of Fund/Manager
VFSTX is a part of the Vanguard Group family of funds, a company based out of Malvern, PA. Vanguard Short-Term Investor Growth Income Investor made its debut in October of 1982, and since then, VFSTX has accumulated about $8.62 billion in assets, per the most up-to-date date available. A team of investment professionals is the fund's current manager.
Performance
Obviously, what investors are looking for in these funds is strong performance relative to their peers. This fund in particular has delivered a 5-year annualized total return of 3.18%, and is in the top third among its category peers. If you're interested in shorter time frames, do not dismiss looking at the fund's 3-year annualized total return of 4.04%, which places it in the top third during this time-frame.
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. The standard deviation of VFSTX over the past three years is 2.73% compared to the category average of 10.96%. Over the past 5 years, the standard deviation of the fund is 2.27% compared to the category average of 9.24%. This makes the fund less volatile than its peers over the past half-decade.
With a beta of 0.46, this fund is less volatile than a broad market index of fixed income securities. Taking this into account, VFSTX has a positive alpha of 0.67, which measures performance on a risk-adjusted basis.
Ratings
Investors should also consider a bond's rating, which is a grade ( 'AAA' to 'D' ) given to a bond that indicates its credit quality. With this letter scale in mind, VFSTX has 26.55% in high quality bonds rated at least 'AA' or higher, while 67.28% are of medium quality, with ratings of 'A' to 'BBB'. The fund has an average quality of A, and focuses on high quality securities.
Expenses
Costs are increasingly important for mutual fund investing, and particularly as competition heats up in this market. And all things being equal, a lower cost product will outperform its otherwise identical counterpart, so taking a closer look at these metrics is key for investors. In terms of fees, VFSTX is a no load fund. It has an expense ratio of 0.20% compared to the category average of 0.73%. VFSTX is actually cheaper than its peers when you consider factors like cost.
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.
Bottom Line
Overall, Vanguard Short-Term Investor Growth Income Investor ( VFSTX ) has a high Zacks Mutual Fund rank, and in conjunction with its comparatively strong performance, better downside risk, and lower fees, this fund looks like a good potential choice for investors right now.
For additional information on the Investment Grade Bond - Short area of the mutual fund world, make sure to check out www.zacks.com/funds/mutual-funds. There, you can see more about the ranking process, and dive even deeper into VFSTX too for additional information. If you are more of a stock investor, make sure to also check out our Zacks Rank, and our full suite of tools we have available for novice and professional investors alike.