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Is Vanguard Diversified Equity Investor (VDEQX) a Strong Mutual Fund Pick Right Now?
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If you've been stuck searching for Large Cap Blend funds, consider Vanguard Diversified Equity Investor (VDEQX - Free Report) as a possibility. VDEQX holds a Zacks Mutual Fund Rank of 1 (Strong Buy), which is based on nine forecasting factors like size, cost, and past performance.
Objective
VDEQX is part of the Large Cap Blend section, an area that boasts an array of many possible options. Large Cap Blend mutual funds most often invest in firms with a market capitalization of $10 billion or more. By investing in bigger companies, these funds offer more stability, and are often well-suited for investors with a " buy and hold " mindset. Blended funds mix large, established companies into their holdings, which gives investors exposure to both value and growth at the same time.
History of Fund/Manager
Vanguard Group is based in Malvern, PA, and is the manager of VDEQX. Vanguard Diversified Equity Investor made its debut in June of 2005, and since then, VDEQX has accumulated about $1.55 billion in assets, per the most up-to-date date available. The fund is currently managed by William A. Coleman who has been in charge of the fund since February of 2013.
Performance
Investors naturally seek funds with strong performance. This fund carries a 5-year annualized total return of 12.76%, 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 9.52%, which places it in the middle 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. VDEQX's standard deviation over the past three years is 10.73% compared to the category average of 10.65%. Over the past 5 years, the standard deviation of the fund is 10.46% compared to the category average of 10.39%. This makes the fund more 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. In the most recent bear market, VDEQX lost 52.19% and underperformed comparable funds by 2.47%. This means that the fund could possibly be a worse choice than its peers during a down market environment.
Investors should note that the fund has a 5-year beta of 1.03, 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. Over the past 5 years, the fund has a negative alpha of -0.53. This means that managers in this portfolio find it difficult to pick securities that generate better-than-benchmark returns.
Holdings
Investigating 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.
The mutual fund currently has 99.43% of its holdings in stocks and it has a negligible amount of assets in foreign securities. This fund's turnover is about 5%, so the fund managers are making 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, VDEQX is a no load fund. It has an expense ratio of 0.16% compared to the category average of 1.00%. From a cost perspective, VDEQX is actually cheaper than its peers.
Investors should also note that the minimum initial investment for the product is $3,000 and that each subsequent investment needs to be at $1.
Bottom Line
Overall, Vanguard Diversified Equity Investor 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.
This could just be the start of your research on VDEQXin the Large Cap Blend category. Consider going to www.zacks.com/funds/mutual-funds for additional information about this fund, and all the others that we rank as well 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 Diversified Equity Investor (VDEQX) a Strong Mutual Fund Pick Right Now?
If you've been stuck searching for Large Cap Blend funds, consider Vanguard Diversified Equity Investor (VDEQX - Free Report) as a possibility. VDEQX holds a Zacks Mutual Fund Rank of 1 (Strong Buy), which is based on nine forecasting factors like size, cost, and past performance.
Objective
VDEQX is part of the Large Cap Blend section, an area that boasts an array of many possible options. Large Cap Blend mutual funds most often invest in firms with a market capitalization of $10 billion or more. By investing in bigger companies, these funds offer more stability, and are often well-suited for investors with a " buy and hold " mindset. Blended funds mix large, established companies into their holdings, which gives investors exposure to both value and growth at the same time.
History of Fund/Manager
Vanguard Group is based in Malvern, PA, and is the manager of VDEQX. Vanguard Diversified Equity Investor made its debut in June of 2005, and since then, VDEQX has accumulated about $1.55 billion in assets, per the most up-to-date date available. The fund is currently managed by William A. Coleman who has been in charge of the fund since February of 2013.
Performance
Investors naturally seek funds with strong performance. This fund carries a 5-year annualized total return of 12.76%, 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 9.52%, which places it in the middle 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. VDEQX's standard deviation over the past three years is 10.73% compared to the category average of 10.65%. Over the past 5 years, the standard deviation of the fund is 10.46% compared to the category average of 10.39%. This makes the fund more 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. In the most recent bear market, VDEQX lost 52.19% and underperformed comparable funds by 2.47%. This means that the fund could possibly be a worse choice than its peers during a down market environment.
Investors should note that the fund has a 5-year beta of 1.03, 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. Over the past 5 years, the fund has a negative alpha of -0.53. This means that managers in this portfolio find it difficult to pick securities that generate better-than-benchmark returns.
Holdings
Investigating 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.
The mutual fund currently has 99.43% of its holdings in stocks and it has a negligible amount of assets in foreign securities. This fund's turnover is about 5%, so the fund managers are making 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, VDEQX is a no load fund. It has an expense ratio of 0.16% compared to the category average of 1.00%. From a cost perspective, VDEQX is actually cheaper than its peers.
Investors should also note that the minimum initial investment for the product is $3,000 and that each subsequent investment needs to be at $1.
Bottom Line
Overall, Vanguard Diversified Equity Investor 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.
This could just be the start of your research on VDEQXin the Large Cap Blend category. Consider going to www.zacks.com/funds/mutual-funds for additional information about this fund, and all the others that we rank as well 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.