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Investment Grade Bond - Long fund seekers should consider taking a look at Vanguard Long-Term Investment-Grade Income Administrative (VWETX - Free Report) . VWETX possesses a Zacks Mutual Fund Rank of 2 (Buy), which is based on nine forecasting factors like size, cost, and past performance.
Objective
The world of Investment Grade Bond - Long funds is an area filled with options, such as VWETX. With a focus on bonds that mature in more than 10 years, Investment Grade Bond - Long funds target the long end of the curve. Investors do inherit a higher duration risk with fixed income instruments at this maturity level, but these funds typically provide a higher yield, at least when compared to their short-maturity counterparts. Finally, investors should also note that the focus on investment grade does make these funds safer, but yields will be lower than in the junk bond category.
History of Fund/Manager
VWETX finds itself in the Vanguard Group family, based out of Malvern, PA. Vanguard Long-Term Investment-Grade Income Administrative made its debut in February of 2001, and since then, VWETX has accumulated about $11.82 billion in assets, per the most up-to-date date available. The fund is currently managed by a team of investment professionals.
Performance
Investors naturally seek funds with strong performance. This fund has delivered a 5-year annualized total return of 3.32%, 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 2.75%, 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, VWETX's standard deviation comes in at 7.1%, compared to the category average of 7.01%. Looking at the past 5 years, the fund's standard deviation is 7.85% compared to the category average of 7.36%. This makes the fund more volatile than its peers over the past half-decade.
Bond Duration
Modified duration is a measure of a given bond's interest rate sensitivity, and is a metric that's a good way to judge how fixed income securities will respond in a shifting rate environment.
For investors who think interest rates will rise, this is an important factor to consider. VWETX has a modified duration of 13.75, which suggests that the fund will decline 13.75% for every hundred-basis-point increase in interest rates.
Income
Since income is, of course, a big reason for purchasing a fixed income security, it is always important to consider the fund's average coupon. This metric calculates the fund's average payout in a given year. For example, this fund's average coupon of 5.05% means that a $10,000 investment should result in a yearly payout of $505.
While a higher coupon is good for when you want a strong level of current income, it could present a reinvestment risk if rates are lower in the future when compared to the initial purchase date of the bond.
Because income is only one part of the bond picture, investors should also consider risk relative to broad benchmarks. VWETX carries a beta of 2.47, meaning that the fund is more volatile than a broad market index of fixed income securities. With this in mind, it has a positive alpha of 0.41, which measures performance on a risk-adjusted basis.
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, VWETX is a no load fund. It has an expense ratio of 0.12% compared to the category average of 0.91%. So, VWETX is actually cheaper than its peers from a cost perspective.
Investors need to be aware that with this product, the minimum initial investment is $50,000; each subsequent investment needs to be at least $1.
Bottom Line
Overall, Vanguard Long-Term Investment-Grade Income Administrative has a high Zacks Mutual Fund rank, and in conjunction with its comparatively strong performance, average downside risk, and lower fees, Vanguard Long-Term Investment-Grade Income Administrative looks like a good potential choice for investors right now.
Don't stop here for your research on Investment Grade Bond - Long 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 VWETX to its peers as well for additional information. Want to learn even more? We have a full suite of tools on stocks that you can use to find the best choices for your portfolio too, no matter what kind of investor you are.
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Is VWETX a Strong Bond Fund Right Now?
Investment Grade Bond - Long fund seekers should consider taking a look at Vanguard Long-Term Investment-Grade Income Administrative (VWETX - Free Report) . VWETX possesses a Zacks Mutual Fund Rank of 2 (Buy), which is based on nine forecasting factors like size, cost, and past performance.
Objective
The world of Investment Grade Bond - Long funds is an area filled with options, such as VWETX. With a focus on bonds that mature in more than 10 years, Investment Grade Bond - Long funds target the long end of the curve. Investors do inherit a higher duration risk with fixed income instruments at this maturity level, but these funds typically provide a higher yield, at least when compared to their short-maturity counterparts. Finally, investors should also note that the focus on investment grade does make these funds safer, but yields will be lower than in the junk bond category.
History of Fund/Manager
VWETX finds itself in the Vanguard Group family, based out of Malvern, PA. Vanguard Long-Term Investment-Grade Income Administrative made its debut in February of 2001, and since then, VWETX has accumulated about $11.82 billion in assets, per the most up-to-date date available. The fund is currently managed by a team of investment professionals.
Performance
Investors naturally seek funds with strong performance. This fund has delivered a 5-year annualized total return of 3.32%, 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 2.75%, 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, VWETX's standard deviation comes in at 7.1%, compared to the category average of 7.01%. Looking at the past 5 years, the fund's standard deviation is 7.85% compared to the category average of 7.36%. This makes the fund more volatile than its peers over the past half-decade.
Bond Duration
Modified duration is a measure of a given bond's interest rate sensitivity, and is a metric that's a good way to judge how fixed income securities will respond in a shifting rate environment.
For investors who think interest rates will rise, this is an important factor to consider. VWETX has a modified duration of 13.75, which suggests that the fund will decline 13.75% for every hundred-basis-point increase in interest rates.
Income
Since income is, of course, a big reason for purchasing a fixed income security, it is always important to consider the fund's average coupon. This metric calculates the fund's average payout in a given year. For example, this fund's average coupon of 5.05% means that a $10,000 investment should result in a yearly payout of $505.
While a higher coupon is good for when you want a strong level of current income, it could present a reinvestment risk if rates are lower in the future when compared to the initial purchase date of the bond.
Because income is only one part of the bond picture, investors should also consider risk relative to broad benchmarks. VWETX carries a beta of 2.47, meaning that the fund is more volatile than a broad market index of fixed income securities. With this in mind, it has a positive alpha of 0.41, which measures performance on a risk-adjusted basis.
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, VWETX is a no load fund. It has an expense ratio of 0.12% compared to the category average of 0.91%. So, VWETX is actually cheaper than its peers from a cost perspective.
Investors need to be aware that with this product, the minimum initial investment is $50,000; each subsequent investment needs to be at least $1.
Bottom Line
Overall, Vanguard Long-Term Investment-Grade Income Administrative has a high Zacks Mutual Fund rank, and in conjunction with its comparatively strong performance, average downside risk, and lower fees, Vanguard Long-Term Investment-Grade Income Administrative looks like a good potential choice for investors right now.
Don't stop here for your research on Investment Grade Bond - Long 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 VWETX to its peers as well for additional information. Want to learn even more? We have a full suite of tools on stocks that you can use to find the best choices for your portfolio too, no matter what kind of investor you are.