Large Cap Value fund seekers should consider taking a look at Vanguard U.S. Value Fund . VUVLX possesses a Zacks Mutual Fund Rank of 1 (Strong Buy), which is based on nine forecasting factors like size, cost, and past performance.
Objective
Large Cap Value mutual funds invest in stocks with a market capitalization of $10 billion or more, but whose share prices do not reflect their intrinsic value; this value investing strategy often leads to low P/E ratios and high dividend yields, though growth levels are often curtailed. The high-growth opportunity of these funds are slowed even further, as large-cap securities are generally in stable industries with low to moderate growth prospects. Therefore, Large Cap Value funds are usually more appealing to investors who are interested in a stable income stream.
History of Fund/Manager
Vanguard Group is responsible for VUVLX, and the company is based out of Malvern, PA. Since Vanguard U.S. Value Fund made its debut in July of 2000, VUVLX has garnered more than $1.71 billion in assets. The fund's current manager, James P. Stetler, has been in charge of the fund since February of 2008.
Performance
Investors naturally seek funds with strong performance. This fund has delivered a 5-year annualized total return of 11.93%, 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 12.52%, 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. Compared to the category average of 10.61%, the standard deviation of VUVLX over the past three years is 10.5%. Looking at the past 5 years, the fund's standard deviation is 10.04% compared to the category average of 10.21%. This makes the fund less volatile than its peers over the past half-decade.
Risk Factors
It's always important to be aware of the downsides to any future investment, so one should not discount the risks that come with this segment. VUVLX lost 51.91% in the most recent bear market and outperformed its peer group by 1.6%. This means that the fund could possibly be a better choice than its peers during a down market environment.
Nevertheless, investors should also note that the fund has a 5-year beta of 0.96, which means it is hypothetically less volatile than the market at large. Alpha is an additional metric to take into consideration, since it represents a portfolio's performance on a risk-adjusted basis relative to a benchmark, which in this case, is the S&P 500. VUVLX's 5-year performance has produced a negative alpha of -1.65, which means 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 largely on equities that are traded in the United States.
The mutual fund currently has 92.49% of its holdings in stocks, which have an average market capitalization of $89.55 billion. The fund has the heaviest exposure to the following market sectors:
- Finance
- Technology
This fund's turnover is about 168%, so the fund managers are making more trades in a given year than the average of 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, VUVLX is a no load fund. It has an expense ratio of 0.23% compared to the category average of 1.03%. From a cost perspective, VUVLX is actually cheaper than its peers.
This fund requires a minimum initial investment of $3,000, and each subsequent investment should be at least $1.
Bottom Line
Overall, Vanguard U.S. Value Fund ( VUVLX ) 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 VUVLXin the Large Cap Value 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. 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 Vanguard U.S. Value Fund (VUVLX) a Strong Mutual Fund Pick Right Now?
Large Cap Value fund seekers should consider taking a look at Vanguard U.S. Value Fund . VUVLX possesses a Zacks Mutual Fund Rank of 1 (Strong Buy), which is based on nine forecasting factors like size, cost, and past performance.
Objective
Large Cap Value mutual funds invest in stocks with a market capitalization of $10 billion or more, but whose share prices do not reflect their intrinsic value; this value investing strategy often leads to low P/E ratios and high dividend yields, though growth levels are often curtailed. The high-growth opportunity of these funds are slowed even further, as large-cap securities are generally in stable industries with low to moderate growth prospects. Therefore, Large Cap Value funds are usually more appealing to investors who are interested in a stable income stream.
History of Fund/Manager
Vanguard Group is responsible for VUVLX, and the company is based out of Malvern, PA. Since Vanguard U.S. Value Fund made its debut in July of 2000, VUVLX has garnered more than $1.71 billion in assets. The fund's current manager, James P. Stetler, has been in charge of the fund since February of 2008.
Performance
Investors naturally seek funds with strong performance. This fund has delivered a 5-year annualized total return of 11.93%, 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 12.52%, 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. Compared to the category average of 10.61%, the standard deviation of VUVLX over the past three years is 10.5%. Looking at the past 5 years, the fund's standard deviation is 10.04% compared to the category average of 10.21%. This makes the fund less volatile than its peers over the past half-decade.
Risk Factors
It's always important to be aware of the downsides to any future investment, so one should not discount the risks that come with this segment. VUVLX lost 51.91% in the most recent bear market and outperformed its peer group by 1.6%. This means that the fund could possibly be a better choice than its peers during a down market environment.
Nevertheless, investors should also note that the fund has a 5-year beta of 0.96, which means it is hypothetically less volatile than the market at large. Alpha is an additional metric to take into consideration, since it represents a portfolio's performance on a risk-adjusted basis relative to a benchmark, which in this case, is the S&P 500. VUVLX's 5-year performance has produced a negative alpha of -1.65, which means 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 largely on equities that are traded in the United States.
The mutual fund currently has 92.49% of its holdings in stocks, which have an average market capitalization of $89.55 billion. The fund has the heaviest exposure to the following market sectors:
- Finance
- Technology
This fund's turnover is about 168%, so the fund managers are making more trades in a given year than the average of 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, VUVLX is a no load fund. It has an expense ratio of 0.23% compared to the category average of 1.03%. From a cost perspective, VUVLX is actually cheaper than its peers.
This fund requires a minimum initial investment of $3,000, and each subsequent investment should be at least $1.
Bottom Line
Overall, Vanguard U.S. Value Fund ( VUVLX ) 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 VUVLXin the Large Cap Value 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. 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.