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Is Vanguard STAR Fund (VGSTX) a Strong Mutual Fund Pick Right Now?
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Having trouble finding an Allocation Balanced fund? Vanguard STAR Fund (VGSTX - Free Report) is a potential starting point. VGSTX bears a Zacks Mutual Fund Rank of 1 (Strong Buy), which is based on nine forecasting factors like size, cost, and past performance.
Objective
VGSTX is classified in the Allocation Balanced segment by Zacks, which is an area full of possibilities. Here, investors are able to get a good head start with diversified mutual funds, and play around with core holding options for a portfolio of funds. Allocation Balanced funds look to invest across a balance of asset types, like stocks, bonds, and cash, though including precious metals or commodities is not unusual; these funds are mostly categorized by their respective asset allocation.
History of Fund/Manager
Vanguard Group is based in Malvern, PA, and is the manager of VGSTX. Vanguard STAR Fund made its debut in March of 1985, and since then, VGSTX has accumulated about $29.20 billion in assets, per the most up-to-date date available. The fund is currently managed by William Coleman who has been in charge of the fund since February of 2013.
Performance
Investors naturally seek funds with strong performance. This fund has delivered a 5-year annualized total return of 12.7%, and it sits in the top third among its category peers. But if you are looking for a shorter time frame, it is also worth looking at its 3-year annualized total return of 14.02%, 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. Over the past three years, VGSTX's standard deviation comes in at 13.02%, compared to the category average of 13%. Looking at the past 5 years, the fund's standard deviation is 10.45% compared to the category average of 10.58%. This makes the fund less volatile than its peers over the past half-decade.
Risk Factors
Investors should note that the fund has a 5-year beta of 0.66, so it is likely going to be less volatile than the market at large. Another factor to consider is alpha, as it reflects a portfolio's performance on a risk-adjusted basis relative to a benchmark-in this case, the S&P 500. The fund has produced a positive alpha over the past 5 years of 0.69, which shows that managers in this portfolio are skilled in picking securities that generate better-than-benchmark returns.
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, VGSTX is a no load fund. It has an expense ratio of 0.31% compared to the category average of 0.89%. VGSTX is actually cheaper than its peers when you consider factors like cost.
Investors should also note that the minimum initial investment for the product is $1,000 and that each subsequent investment needs to be at $1.
Bottom Line
Overall, Vanguard STAR Fund ( VGSTX ) has a high Zacks Mutual Fund rank, and in conjunction with its comparatively strong performance, average downside risk, and lower fees, this fund looks like a good potential choice for investors right now.
For additional information on the Allocation Balanced 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 VGSTX too for additional information. For analysis of the rest of your portfolio, make sure to visit Zacks.com for our full suite of tools which will help you investigate all of your stocks and funds in one place.
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Is Vanguard STAR Fund (VGSTX) a Strong Mutual Fund Pick Right Now?
Having trouble finding an Allocation Balanced fund? Vanguard STAR Fund (VGSTX - Free Report) is a potential starting point. VGSTX bears a Zacks Mutual Fund Rank of 1 (Strong Buy), which is based on nine forecasting factors like size, cost, and past performance.
Objective
VGSTX is classified in the Allocation Balanced segment by Zacks, which is an area full of possibilities. Here, investors are able to get a good head start with diversified mutual funds, and play around with core holding options for a portfolio of funds. Allocation Balanced funds look to invest across a balance of asset types, like stocks, bonds, and cash, though including precious metals or commodities is not unusual; these funds are mostly categorized by their respective asset allocation.
History of Fund/Manager
Vanguard Group is based in Malvern, PA, and is the manager of VGSTX. Vanguard STAR Fund made its debut in March of 1985, and since then, VGSTX has accumulated about $29.20 billion in assets, per the most up-to-date date available. The fund is currently managed by William Coleman who has been in charge of the fund since February of 2013.
Performance
Investors naturally seek funds with strong performance. This fund has delivered a 5-year annualized total return of 12.7%, and it sits in the top third among its category peers. But if you are looking for a shorter time frame, it is also worth looking at its 3-year annualized total return of 14.02%, 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. Over the past three years, VGSTX's standard deviation comes in at 13.02%, compared to the category average of 13%. Looking at the past 5 years, the fund's standard deviation is 10.45% compared to the category average of 10.58%. This makes the fund less volatile than its peers over the past half-decade.
Risk Factors
Investors should note that the fund has a 5-year beta of 0.66, so it is likely going to be less volatile than the market at large. Another factor to consider is alpha, as it reflects a portfolio's performance on a risk-adjusted basis relative to a benchmark-in this case, the S&P 500. The fund has produced a positive alpha over the past 5 years of 0.69, which shows that managers in this portfolio are skilled in picking securities that generate better-than-benchmark returns.
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, VGSTX is a no load fund. It has an expense ratio of 0.31% compared to the category average of 0.89%. VGSTX is actually cheaper than its peers when you consider factors like cost.
Investors should also note that the minimum initial investment for the product is $1,000 and that each subsequent investment needs to be at $1.
Bottom Line
Overall, Vanguard STAR Fund ( VGSTX ) has a high Zacks Mutual Fund rank, and in conjunction with its comparatively strong performance, average downside risk, and lower fees, this fund looks like a good potential choice for investors right now.
For additional information on the Allocation Balanced 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 VGSTX too for additional information. For analysis of the rest of your portfolio, make sure to visit Zacks.com for our full suite of tools which will help you investigate all of your stocks and funds in one place.