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Looking for a Government Bond - Long fund? You may want to consider Vanguard Long-Term Treasury Investor (VUSTX - Free Report) as a possible option. VUSTX carries a Zacks Mutual Fund Rank of 3 (Hold), which is based on nine forecasting factors like size, cost, and past performance.
Objective
VUSTX is part of the Government Bond - Long section, a segment that boasts an array of possible selections. Government Bond - Long funds hold securities issued by the federal government of the United States of America. These are seen as extremely low risk securities from a default perspective, and are often regarded as risk-free assets. This category focuses on the long end of the curve, and that results in higher yields, but greater sensitivity to interest rate fluctuations, too.
History of Fund/Manager
VUSTX finds itself in the Vanguard Group family, based out of Malvern, PA. Vanguard Long-Term Treasury Investor debuted in May of 1986. Since then, VUSTX has accumulated assets of about $730.72 million, according to the most recently available information. The fund is currently managed by Gemma Wright Casparius who has been in charge of the fund since January of 2015.
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 2.88%, 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 -1%, 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 VUSTX over the past three years is 9.39% compared to the category average of 7.83%. Looking at the past 5 years, the fund's standard deviation is 10.34% compared to the category average of 8.25%. This makes the fund more 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 investors who think interest rates will rise, this is an important factor to consider. VUSTX has a modified duration of 17, which suggests that the fund will decline 17% 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 3.1% means that a $10,000 investment should result in a yearly payout of $310.
If you are looking for a strong level of current income, a higher coupon is a good choice, though it could pose a reinvestment risk; these risks can occur if rates are lower in the future when compared to the initial purchase date of the bond.
Income is only one part of the bond picture, investors also need to consider risk relative to broad benchmarks. VUSTX carries a beta of 3.17, meaning that the fund is more volatile than a broad market index of fixed income securities. With this in mind, it has a negative alpha of -1.64, 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, VUSTX is a no load fund. It has an expense ratio of 0.20% compared to the category average of 0.86%. So, VUSTX is actually cheaper than its peers from a cost perspective.
This fund requires a minimum initial investment of $3,000, and each subsequent investment should be at least $1.
Bottom Line
Overall, Vanguard Long-Term Treasury Investor ( VUSTX ) 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.
Want even more information about VUSTX? Then go over to Zacks.com and check out our mutual fund comparison tool, and all of the other great features that we have to help you with your mutual fund analysis 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 VUSTX a Strong Bond Fund Right Now?
Looking for a Government Bond - Long fund? You may want to consider Vanguard Long-Term Treasury Investor (VUSTX - Free Report) as a possible option. VUSTX carries a Zacks Mutual Fund Rank of 3 (Hold), which is based on nine forecasting factors like size, cost, and past performance.
Objective
VUSTX is part of the Government Bond - Long section, a segment that boasts an array of possible selections. Government Bond - Long funds hold securities issued by the federal government of the United States of America. These are seen as extremely low risk securities from a default perspective, and are often regarded as risk-free assets. This category focuses on the long end of the curve, and that results in higher yields, but greater sensitivity to interest rate fluctuations, too.
History of Fund/Manager
VUSTX finds itself in the Vanguard Group family, based out of Malvern, PA. Vanguard Long-Term Treasury Investor debuted in May of 1986. Since then, VUSTX has accumulated assets of about $730.72 million, according to the most recently available information. The fund is currently managed by Gemma Wright Casparius who has been in charge of the fund since January of 2015.
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 2.88%, 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 -1%, 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 VUSTX over the past three years is 9.39% compared to the category average of 7.83%. Looking at the past 5 years, the fund's standard deviation is 10.34% compared to the category average of 8.25%. This makes the fund more 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 investors who think interest rates will rise, this is an important factor to consider. VUSTX has a modified duration of 17, which suggests that the fund will decline 17% 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 3.1% means that a $10,000 investment should result in a yearly payout of $310.
If you are looking for a strong level of current income, a higher coupon is a good choice, though it could pose a reinvestment risk; these risks can occur if rates are lower in the future when compared to the initial purchase date of the bond.
Income is only one part of the bond picture, investors also need to consider risk relative to broad benchmarks. VUSTX carries a beta of 3.17, meaning that the fund is more volatile than a broad market index of fixed income securities. With this in mind, it has a negative alpha of -1.64, 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, VUSTX is a no load fund. It has an expense ratio of 0.20% compared to the category average of 0.86%. So, VUSTX is actually cheaper than its peers from a cost perspective.
This fund requires a minimum initial investment of $3,000, and each subsequent investment should be at least $1.
Bottom Line
Overall, Vanguard Long-Term Treasury Investor ( VUSTX ) 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.
Want even more information about VUSTX? Then go over to Zacks.com and check out our mutual fund comparison tool, and all of the other great features that we have to help you with your mutual fund analysis 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.