Back to top

Image: Bigstock

Is Vanguard Balanced Index Administrative (VBIAX) a Strong Mutual Fund Pick Right Now?

Read MoreHide Full Article

Having trouble finding an Allocation Balanced fund? Vanguard Balanced Index Administrative (VBIAX - Free Report) is a potential starting point. VBIAX carries a Zacks Mutual Fund Rank of 2 (Buy), which is based on nine forecasting factors like size, cost, and past performance.

Objective

VBIAX 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 responsible for VBIAX, and the company is based out of Malvern, PA. The Vanguard Balanced Index Administrative made its debut in November of 2000 and VBIAX has managed to accumulate roughly $23.37 billion in assets, as of the most recently available information. 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 8.5%, and it sits 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 6.63%, 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. VBIAX's standard deviation over the past three years is 6.2% compared to the category average of 8.15%. Looking at the past 5 years, the fund's standard deviation is 6.03% compared to the category average of 8.06%. This makes the fund less volatile than its peers over the past half-decade.

Risk Factors

One cannot ignore the volatility of this segment, however, as it is always important for investors to remember the downside to any potential investment. VBIAX lost 32.49% in the most recent bear market and outperformed its peer group by 3.69%. This makes the fund a possibly better choice than its peers during a sliding market environment.

Nevertheless, with a 5-year beta of 0.59, the fund is likely to be less volatile than the market average. 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. VBIAX has generated a positive alpha over the past five years of 0.49, demonstrating that managers in this portfolio are skilled in picking securities that generate better-than-benchmark returns.

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, VBIAX is a no load fund. It has an expense ratio of 0.07% compared to the category average of 0.90%. Looking at the fund from a cost perspective, VBIAX is actually cheaper than its peers.

Investors should also note that the minimum initial investment for the product is $10,000 and that each subsequent investment needs to be at $1.

Bottom Line

Overall, Vanguard Balanced Index Administrative has a high Zacks Mutual Fund rank, and in conjunction with its comparatively strong performance, average downside risk, and lower fees, Vanguard Balanced Index Administrative looks like a good potential choice for investors right now.

Don't stop here for your research on Allocation Balanced 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 VBIAX to its peers as well for additional information. Zacks provides a full suite of tools to help you analyze your portfolio - both funds and stocks - in the most efficient way possible.


See More Zacks Research for These Tickers


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


Vanguard Balanced Index Adm (VBIAX) - free report >>