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Have you been searching for a Government - Bonds: Misc fund? You might want to begin with Vanguard Inflation Pro Security Fund (VIPSX - Free Report) . VIPSX holds a Zacks Mutual Fund Rank of 3 (Hold), which is based on nine forecasting factors like size, cost, and past performance.
Objective
VIPSX is one of many Government - Bonds: Misc funds to choose from. In their portfolios, Government - Bonds: Misc funds hold securities issued by the United States' federal government, which are often seen as risk-free assets and described as extremely low-risk from a default perspective. While a mixed approach usually results in a medium yield and risk profile, this fund category focuses across the curve, meaning the yields and interest rate sensitivity will vary.
History of Fund/Manager
VIPSX finds itself in the Vanguard Group family, based out of Malvern, PA. The Vanguard Inflation Pro Security Fund made its debut in June of 2000 and VIPSX has managed to accumulate roughly $3.91 billion in assets, as of the most recently available information. The fund is currently managed by Gemma Wright Casparius who has been in charge of the fund since August of 2011.
Performance
Obviously, what investors are looking for in these funds is strong performance relative to their peers. This fund carries a 5-year annualized total return of 0.56%, 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 1.2%, 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, VIPSX's standard deviation comes in at 3.13%, compared to the category average of 6.86%. Looking at the past 5 years, the fund's standard deviation is 4.19% compared to the category average of 6.95%. This makes the fund less volatile than its peers over the past half-decade.
Bond Duration
Modified duration is a measure of a specific bond's interest rate sensitivity, and is an excellent way to judge how fixed income securities will respond to a shifting rate environment.
For those that believe interest rates will rise, this is an important factor to consider. VIPSX has a modified duration of 7.97, which suggests that the fund will decline 7.97% for every hundred-basis-point increase in interest rates.
Income
We must remember to consider the fund's average coupon, as income is traditionally a big reason for purchasing a fixed income security. Average coupon is a look at the average payout by the fund in a given year. For example, this fund's average coupon of 0.84% means that a $10,000 investment should result in a yearly payout of $84.
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.
Since income is just one part of the bond picture, investors need to consider risk relative to broad benchmarks. VIPSX carries a beta of 0.94, meaning that the fund is less volatile than a broad market index of fixed income securities. With this in mind, it has a negative alpha of -1.73, 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, VIPSX is a no load fund. It has an expense ratio of 0.20% compared to the category average of 0.81%. Looking at the fund from a cost perspective, VIPSX is actually cheaper than its peers.
Investors need to be aware that with this product, the minimum initial investment is $3,000; each subsequent investment needs to be at least $1.
Bottom Line
Overall, Vanguard Inflation Pro Security Fund has a neutral Zacks Mutual Fund rank, and in conjunction with its comparatively strong performance, average downside risk, and lower fees, this fund looks like a somewhat average choice for investors right now.
Your research on the Government - Bonds: Misc segment doesn't have to stop here. You can check out all the great mutual fund tools we have to offer by going to www.zacks.com/funds/mutual-funds to see the additional features we offer as well for additional information. And don't forget, Zacks has all of your needs covered on the equity side too! Make sure to check out Zacks.com for more information on our screening capabilities, Rank, and all our articles as well.
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Is VIPSX a Strong Bond Fund Right Now?
Have you been searching for a Government - Bonds: Misc fund? You might want to begin with Vanguard Inflation Pro Security Fund (VIPSX - Free Report) . VIPSX holds a Zacks Mutual Fund Rank of 3 (Hold), which is based on nine forecasting factors like size, cost, and past performance.
Objective
VIPSX is one of many Government - Bonds: Misc funds to choose from. In their portfolios, Government - Bonds: Misc funds hold securities issued by the United States' federal government, which are often seen as risk-free assets and described as extremely low-risk from a default perspective. While a mixed approach usually results in a medium yield and risk profile, this fund category focuses across the curve, meaning the yields and interest rate sensitivity will vary.
History of Fund/Manager
VIPSX finds itself in the Vanguard Group family, based out of Malvern, PA. The Vanguard Inflation Pro Security Fund made its debut in June of 2000 and VIPSX has managed to accumulate roughly $3.91 billion in assets, as of the most recently available information. The fund is currently managed by Gemma Wright Casparius who has been in charge of the fund since August of 2011.
Performance
Obviously, what investors are looking for in these funds is strong performance relative to their peers. This fund carries a 5-year annualized total return of 0.56%, 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 1.2%, 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, VIPSX's standard deviation comes in at 3.13%, compared to the category average of 6.86%. Looking at the past 5 years, the fund's standard deviation is 4.19% compared to the category average of 6.95%. This makes the fund less volatile than its peers over the past half-decade.
Bond Duration
Modified duration is a measure of a specific bond's interest rate sensitivity, and is an excellent way to judge how fixed income securities will respond to a shifting rate environment.
For those that believe interest rates will rise, this is an important factor to consider. VIPSX has a modified duration of 7.97, which suggests that the fund will decline 7.97% for every hundred-basis-point increase in interest rates.
Income
We must remember to consider the fund's average coupon, as income is traditionally a big reason for purchasing a fixed income security. Average coupon is a look at the average payout by the fund in a given year. For example, this fund's average coupon of 0.84% means that a $10,000 investment should result in a yearly payout of $84.
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.
Since income is just one part of the bond picture, investors need to consider risk relative to broad benchmarks. VIPSX carries a beta of 0.94, meaning that the fund is less volatile than a broad market index of fixed income securities. With this in mind, it has a negative alpha of -1.73, 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, VIPSX is a no load fund. It has an expense ratio of 0.20% compared to the category average of 0.81%. Looking at the fund from a cost perspective, VIPSX is actually cheaper than its peers.
Investors need to be aware that with this product, the minimum initial investment is $3,000; each subsequent investment needs to be at least $1.
Bottom Line
Overall, Vanguard Inflation Pro Security Fund has a neutral Zacks Mutual Fund rank, and in conjunction with its comparatively strong performance, average downside risk, and lower fees, this fund looks like a somewhat average choice for investors right now.
Your research on the Government - Bonds: Misc segment doesn't have to stop here. You can check out all the great mutual fund tools we have to offer by going to www.zacks.com/funds/mutual-funds to see the additional features we offer as well for additional information. And don't forget, Zacks has all of your needs covered on the equity side too! Make sure to check out Zacks.com for more information on our screening capabilities, Rank, and all our articles as well.