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Is Vanguard Tax-Managed Cap Appreciation Institutional (VTCIX) a Strong Mutual Fund Pick Right Now?

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Mutual Fund Equity Report fund seekers should consider taking a look at Vanguard Tax-Managed Cap Appreciation Institutional (VTCIX - Free Report) . VTCIX holds a Zacks Mutual Fund Rank of 1 (Strong Buy), which is based on nine forecasting factors like size, cost, and past performance.

History of Fund/Manager

VTCIX is a part of the Vanguard Group family of funds, a company based out of Malvern, PA. Since Vanguard Tax-Managed Cap Appreciation Institutional made its debut in February of 1999, VTCIX has garnered more than $2.23 billion in assets. William Coleman is the fund's current manager and has held that role since April of 2016.

Performance

Obviously, what investors are looking for in these funds is strong performance relative to their peers. VTCIX has a 5-year annualized total return of 13.58% and it sits in the top third among its category peers. Investors who prefer analyzing shorter time frames should look at its 3-year annualized total return of 13.68%, 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. VTCIX's standard deviation over the past three years is 19.2% compared to the category average of 16.37%. Over the past 5 years, the standard deviation of the fund is 16.81% compared to the category average of 14.56%. This makes the fund more volatile than its peers over the past half-decade.

Risk Factors

Investors should note that the fund has a 5-year beta of 1.02, so it is likely going to be as volatile as the market at large. Because alpha represents a portfolio's performance on a risk-adjusted basis relative to a benchmark, which is the S&P 500 in this case, one should pay attention to this metric as well. VTCIX's 5-year performance has produced a negative alpha of -0.25, which means managers in this portfolio find it difficult to pick securities that generate better-than-benchmark returns.

Holdings

Examining the equity holdings of a mutual fund is also a valuable exercise. This can show us how the manager is applying their stated methodology, as well as if there are any inherent biases in their approach. For this particular fund, the focus is primarily on equities that are traded in the United States.

Right now, 99.16% of this mutual fund's holdings are stocks, with an average market capitalization of $413.77 billion. The fund has the heaviest exposure to the following market sectors:

  1. Technology
  2. Finance
  3. Retail Trade
This fund's turnover is about 0%, so the fund managers are making fewer trades than its comparable peers.

Expenses

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, VTCIX is a no load fund. It has an expense ratio of 0.06% compared to the category average of 0.99%. So, VTCIX is actually cheaper than its peers from a cost perspective.

This fund requires a minimum initial investment of $5 million, and each subsequent investment should be at least $1.

Bottom Line

Overall, Vanguard Tax-Managed Cap Appreciation Institutional ( VTCIX ) 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.

Want even more information about VTCIX? Then go over to Zacks.com and check out our mutual fund comparison tool, and all of the other great features that we have to help you with your mutual fund analysis for additional information. If you want to check out our stock reports as well, make sure to go to Zacks.com to see all of the great tools we have to offer, including our time-tested Zacks Rank.


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