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Is Vanguard Growth Index Institutional (VIGIX) a Strong Mutual Fund Pick Right Now?

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If you've been stuck searching for Large Cap Growth funds, consider Vanguard Growth Index Institutional (VIGIX - Free Report) as a possibility. VIGIX holds a Zacks Mutual Fund Rank of 1 (Strong Buy), which is based on nine forecasting factors like size, cost, and past performance.

Objective

We classify VIGIX in the Large Cap Growth category, an area rife with potential choices. Large Cap Growth funds invest in many large U.S. companies that are expected to grow much faster compared to other large-cap stocks. To be considered large-cap, companies must have a market cap over $10 billion.

History of Fund/Manager

VIGIX finds itself in the Vanguard Group family, based out of Malvern, PA. Since Vanguard Growth Index Institutional made its debut in May of 1998, VIGIX has garnered more than $13.55 billion in assets. Gerard C. O'Reilly is the fund's current manager and has held that role since May of 1998.

Performance

Investors naturally seek funds with strong performance. VIGIX has a 5-year annualized total return of 11.73% and it sits in the middle third among its category peers. If you're interested in shorter time frames, do not dismiss looking at the fund's 3-year annualized total return of 11.88%, 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. The standard deviation of VIGIX over the past three years is 11.14% compared to the category average of 9.59%. Looking at the past 5 years, the fund's standard deviation is 11.45% compared to the category average of 9.71%. This makes the fund more volatile than its peers over the past half-decade.

Risk Factors

Investors should always remember the downsides to a potential investment, and this segment carries some risks one should be aware of. In VIGIX's case, the fund lost 47.07% in the most recent bear market and outperformed its peer group by 1.71%. This could mean that the fund is a better choice than comparable funds during a bear market.

Even still, the fund has a 5-year beta of 1.09, so investors should note that it is hypothetically more volatile than the market at large. Because alpha represents a portfolio's performance on a risk-adjusted basis relative to a benchmark, which is the S&P 500 in this case, one should pay attention to this metric as well. The fund has produced a negative alpha over the past 5 years of -0.23, which shows that managers in this portfolio find it difficult to pick securities that generate better-than-benchmark returns.

Holdings

Examining 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 mostly on equities that are traded in the United States.

This fund is currently holding about 87.54% stock in stocks, with an average market capitalization of $287.65 billion. The fund has the heaviest exposure to the following market sectors:

  1. Technology
  2. Retail Trade
  3. Non-Durable
This fund's turnover is about 20%, so the fund managers are making fewer trades than comparable funds.

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, VIGIX is a no load fund. It has an expense ratio of 0.04% compared to the category average of 1.10%. Looking at the fund from a cost perspective, VIGIX is actually cheaper than its peers.

This fund requires a minimum initial investment of $5 million, and each subsequent investment should be at least $1.

Bottom Line

Overall, Vanguard Growth Index Institutional ( VIGIX ) has a high Zacks Mutual Fund rank, and in conjunction with its comparatively similar performance, average downside risk, and lower fees, this fund looks like a good potential choice for investors right now.

Want even more information about VIGIX? 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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