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Is Vanguard Target Retirement 2035 Fund (VTTHX) a Strong Mutual Fund Pick Right Now?
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If you've been stuck searching for Target Date funds, consider Vanguard Target Retirement 2035 Fund (VTTHX - Free Report) as a possibility. The fund does not have a Zacks Mutual Fund Rank, though we have been able to explore other metrics like performance, volatility, and cost.
History of Fund/Manager
Vanguard Group is based in Malvern, PA, and is the manager of VTTHX. Since Vanguard Target Retirement 2035 Fund made its debut in October of 2003, VTTHX has garnered more than $32.51 billion in assets. William A. Coleman is the fund's current manager and has held that role since February of 2013.
Performance
Obviously, what investors are looking for in these funds is strong performance relative to their peers. VTTHX has a 5-year annualized total return of 6.6% 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 7.2%, 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. The standard deviation of VTTHX over the past three years is 7.73% compared to the category average of 7.24%. The standard deviation of the fund over the past 5 years is 8.22% compared to the category average of 7.5%. This makes the fund more 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. In the most recent bear market, VTTHX lost 48.05% and underperformed comparable funds by 2.79%. This means that the fund could possibly be a worse choice than its peers during a down market environment.
Investors should not forget about beta, an important way to measure a mutual fund's risk compared to the market as a whole. VTTHX has a 5-year beta of 0.79, which means it is likely to be less volatile than the market average. Another factor to consider is alpha, as it reflects a portfolio's performance on a risk-adjusted basis relative to a benchmark-in this case, the S&P 500. VTTHX has generated a negative alpha over the past five years of -2.22, demonstrating that managers in this portfolio find it difficult to pick securities that generate better-than-benchmark returns.
Expenses
For investors, taking a closer look at cost-related metrics is key, since costs are increasingly important for mutual fund investing. Competition is heating up in this space, and a lower cost product will likely outperform its otherwise identical counterpart, all things being equal. In terms of fees, VTTHX is a no load fund. It has an expense ratio of 0.14% compared to the category average of 0.46%. So, VTTHX is actually cheaper than its peers from a cost perspective.
Investors should also note that the minimum initial investment for the product is $1,000 and that each subsequent investment needs to be at $1.
Bottom Line
For additional information on this product, or to compare it to other mutual funds in the Target Date, make sure to go to www.zacks.com/funds/mutual-funds 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 Target Retirement 2035 Fund (VTTHX) a Strong Mutual Fund Pick Right Now?
If you've been stuck searching for Target Date funds, consider Vanguard Target Retirement 2035 Fund (VTTHX - Free Report) as a possibility. The fund does not have a Zacks Mutual Fund Rank, though we have been able to explore other metrics like performance, volatility, and cost.
History of Fund/Manager
Vanguard Group is based in Malvern, PA, and is the manager of VTTHX. Since Vanguard Target Retirement 2035 Fund made its debut in October of 2003, VTTHX has garnered more than $32.51 billion in assets. William A. Coleman is the fund's current manager and has held that role since February of 2013.
Performance
Obviously, what investors are looking for in these funds is strong performance relative to their peers. VTTHX has a 5-year annualized total return of 6.6% 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 7.2%, 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. The standard deviation of VTTHX over the past three years is 7.73% compared to the category average of 7.24%. The standard deviation of the fund over the past 5 years is 8.22% compared to the category average of 7.5%. This makes the fund more 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. In the most recent bear market, VTTHX lost 48.05% and underperformed comparable funds by 2.79%. This means that the fund could possibly be a worse choice than its peers during a down market environment.
Investors should not forget about beta, an important way to measure a mutual fund's risk compared to the market as a whole. VTTHX has a 5-year beta of 0.79, which means it is likely to be less volatile than the market average. Another factor to consider is alpha, as it reflects a portfolio's performance on a risk-adjusted basis relative to a benchmark-in this case, the S&P 500. VTTHX has generated a negative alpha over the past five years of -2.22, demonstrating that managers in this portfolio find it difficult to pick securities that generate better-than-benchmark returns.
Expenses
For investors, taking a closer look at cost-related metrics is key, since costs are increasingly important for mutual fund investing. Competition is heating up in this space, and a lower cost product will likely outperform its otherwise identical counterpart, all things being equal. In terms of fees, VTTHX is a no load fund. It has an expense ratio of 0.14% compared to the category average of 0.46%. So, VTTHX is actually cheaper than its peers from a cost perspective.
Investors should also note that the minimum initial investment for the product is $1,000 and that each subsequent investment needs to be at $1.
Bottom Line
For additional information on this product, or to compare it to other mutual funds in the Target Date, make sure to go to www.zacks.com/funds/mutual-funds 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.