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Is Vanguard Windsor-II Admiral (VWNAX) a Strong Mutual Fund Pick Right Now?
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If investors are looking at the Large Cap Value fund category, Vanguard Windsor-II Admiral (VWNAX - Free Report) could be a potential option. VWNAX carries a Zacks Mutual Fund Rank of 2 (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 based in Malvern, PA, and is the manager of VWNAX. Since Vanguard Windsor-II Admiral made its debut in May of 2001, VWNAX has garnered more than $30.58 billion in assets. The fund is currently managed by a team of investment professionals.
Performance
Of course, investors look for strong performance in funds. This fund has delivered a 5-year annualized total return of 5.5%, and it sits in the bottom 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 6.65%, 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 10.24%, the standard deviation of VWNAX over the past three years is 11.37%. Looking at the past 5 years, the fund's standard deviation is 11.23% compared to the category average of 10.12%. This makes the fund more volatile than its peers over the past half-decade.
Risk Factors
Investors cannot discount the risks to this segment though, as it is always important to remember the downside for any potential investment. VWNAX lost 52.8% in the most recent bear market and underperformed comparable funds by 2.07%. These results could imply that the fund is a worse choice than its peers during a sliding market environment.
Even still, the fund has a 5-year beta of 0.99, so investors should note that it is hypothetically as volatile as 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. VWNAX's 5-year performance has produced a negative alpha of -2.65, which means 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 primarily on equities that are traded in the United States.
Right now, 95.5% of this mutual fund's holdings are stocks, with an average market capitalization of $177.80 billion. The fund has the heaviest exposure to the following market sectors:
Finance
Technology
Turnover is about 52%, so those in charge of the fund make more trades in a given year than the category average.
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, VWNAX is a no load fund. It has an expense ratio of 0.26% compared to the category average of 1%. Looking at the fund from a cost perspective, VWNAX is actually cheaper than its peers.
While the minimum initial investment for the product is $50,000, investors should also note that each subsequent investment needs to be at least $1.
Bottom Line
Overall, Vanguard Windsor-II Admiral ( VWNAX ) has a high Zacks Mutual Fund rank, and in conjunction with its comparatively weak performance, average downside risk, and lower fees, Vanguard Windsor-II Admiral ( VWNAX ) looks like a great potential choice for investors right now.
For additional information on the Large Cap Value area of the mutual fund world, make sure to check out www.zacks.com/funds/mutual-funds. There, you can see more about the ranking process, and dive even deeper into VWNAX too 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 Windsor-II Admiral (VWNAX) a Strong Mutual Fund Pick Right Now?
If investors are looking at the Large Cap Value fund category, Vanguard Windsor-II Admiral (VWNAX - Free Report) could be a potential option. VWNAX carries a Zacks Mutual Fund Rank of 2 (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 based in Malvern, PA, and is the manager of VWNAX. Since Vanguard Windsor-II Admiral made its debut in May of 2001, VWNAX has garnered more than $30.58 billion in assets. The fund is currently managed by a team of investment professionals.
Performance
Of course, investors look for strong performance in funds. This fund has delivered a 5-year annualized total return of 5.5%, and it sits in the bottom 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 6.65%, 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 10.24%, the standard deviation of VWNAX over the past three years is 11.37%. Looking at the past 5 years, the fund's standard deviation is 11.23% compared to the category average of 10.12%. This makes the fund more volatile than its peers over the past half-decade.
Risk Factors
Investors cannot discount the risks to this segment though, as it is always important to remember the downside for any potential investment. VWNAX lost 52.8% in the most recent bear market and underperformed comparable funds by 2.07%. These results could imply that the fund is a worse choice than its peers during a sliding market environment.
Even still, the fund has a 5-year beta of 0.99, so investors should note that it is hypothetically as volatile as 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. VWNAX's 5-year performance has produced a negative alpha of -2.65, which means 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 primarily on equities that are traded in the United States.
Right now, 95.5% of this mutual fund's holdings are stocks, with an average market capitalization of $177.80 billion. The fund has the heaviest exposure to the following market sectors:
- Finance
- Technology
Turnover is about 52%, so those in charge of the fund make more trades in a given year than the category average.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, VWNAX is a no load fund. It has an expense ratio of 0.26% compared to the category average of 1%. Looking at the fund from a cost perspective, VWNAX is actually cheaper than its peers.
While the minimum initial investment for the product is $50,000, investors should also note that each subsequent investment needs to be at least $1.
Bottom Line
Overall, Vanguard Windsor-II Admiral ( VWNAX ) has a high Zacks Mutual Fund rank, and in conjunction with its comparatively weak performance, average downside risk, and lower fees, Vanguard Windsor-II Admiral ( VWNAX ) looks like a great potential choice for investors right now.
For additional information on the Large Cap Value area of the mutual fund world, make sure to check out www.zacks.com/funds/mutual-funds. There, you can see more about the ranking process, and dive even deeper into VWNAX too 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.