Back to top

Image: Bigstock

Is Vanguard Index Trust 500 Index Fund (VFINX) a Strong Mutual Fund Pick Right Now?

Read MoreHide Full Article

Have you been searching for a Mutual Fund Equity Report fund? You might want to begin with Vanguard Index Trust 500 Index Fund (VFINX - Free Report) . VFINX has no Zacks Mutual Fund Rank, but we have been able to look into other metrics like performance, volatility, and cost.

History of Fund/Manager

VFINX is a part of the Vanguard Group family of funds, a company based out of Malvern, PA. Vanguard Index Trust 500 Index Fund debuted in August of 1976. Since then, VFINX has accumulated assets of about $3.48 billion, according to the most recently available information. Donald Butler is the fund's current manager and has held that role since April of 2016.

Performance

Of course, investors look for strong performance in funds. This fund in particular has delivered a 5-year annualized total return of 12.68%, and is 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 13.21%, 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. VFINX's standard deviation over the past three years is 19.31% compared to the category average of 16.51%. Looking at the past 5 years, the fund's standard deviation is 17.39% compared to the category average of 14.86%. 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, which means it is hypothetically 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. Over the past 5 years, the fund has a negative alpha of -0.12. This means that 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 mostly on equities that are traded in the United States.

Right now, 98.81% of this mutual fund's holdings are stocks, with an average market capitalization of $415.23 billion. The fund has the heaviest exposure to the following market sectors:

  1. Technology
  2. Finance
  3. Retail Trade
With turnover at about 2%, this fund makes fewer trades than comparable funds.

Expenses

As competition heats up in the mutual fund market, costs become increasingly important. Compared to its otherwise identical counterpart, a low-cost product will be an outperformer, all other things being equal. Thus, taking a closer look at cost-related metrics is vital for investors. In terms of fees, VFINX is a no load fund. It has an expense ratio of 0.14% compared to the category average of 0.79%. VFINX is actually cheaper than its peers when you consider factors like cost.

This fund requires a minimum initial investment of $0, while there is no minimum for each subsequent investment.

Bottom Line

Don't stop here for your research on Mutual Fund Equity Report funds. We also have plenty more on our site in order to help you find the best possible fund for your portfolio. Make sure to check out www.zacks.com/funds/mutual-funds for more information about the world of funds, and feel free to compare VFINX to its peers as well 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.


See More Zacks Research for These Tickers


Normally $25 each - click below to receive one report FREE:


Vanguard 500 Index Inv (VFINX) - free report >>

Published in