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Is Vanguard Financials Index Admiral (VFAIX) a Strong Mutual Fund Pick Right Now?
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Any investors hoping to find a Sector - Finance fund could think about starting with Vanguard Financials Index Admiral (VFAIX - Free Report) . VFAIX has a Zacks Mutual Fund Rank of 2 (Buy), which is based on nine forecasting factors like size, cost, and past performance.
Objective
VFAIX is classified in the Sector - Finance segment by Zacks, and this area is full of possibilities. The financial space is notoriously large, complex, and heavily-regulated, and Sector - Finance mutual funds give investors a stable, diversified approach to investing in this industry. These funds can include everything from banks and investment giants to exchanges and insurance companies, though investors should note that interest rates could have a big impact.
History of Fund/Manager
Vanguard Group is based in Malvern, PA, and is the manager of VFAIX. Vanguard Financials Index Admiral debuted in January of 2004. Since then, VFAIX has accumulated assets of about $593.84 million, according to the most recently available information. The fund is currently managed by William A. Coleman who has been in charge of the fund since December of 2015.
Performance
Of course, investors look for strong performance in funds. This fund has delivered a 5-year annualized total return of 10.65%, and is in the top 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 15.68%, 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. VFAIX's standard deviation over the past three years is 15.92% compared to the category average of 16.83%. The standard deviation of the fund over the past 5 years is 14.65% compared to the category average of 15.29%. This makes the fund less 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. In the most recent bear market, VFAIX lost 71.44% and underperformed comparable funds by 9.94%. This makes the fund a possibly worse choice than its peers during a sliding market environment.
Nevertheless, investors should also note that the fund has a 5-year beta of 1.08, which means 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 -0.72, which shows that 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 principally on equities that are traded in the United States.
Right now, 83.45% of this mutual fund's holdings are stocks, which have an average market capitalization of $96.94 billion. Turnover is about 3%, so those in charge of the fund make fewer trades than its comparable peers.
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, VFAIX is a no load fund. It has an expense ratio of 0.10% compared to the category average of 1.42%. VFAIX is actually cheaper than its peers when you consider factors like cost.
While the minimum initial investment for the product is $100,000, investors should also note that each subsequent investment needs to be at least $1.
Bottom Line
Overall, Vanguard Financials Index Admiral ( VFAIX ) has a high Zacks Mutual Fund rank, strong performance, average downside risk, and lower fees compared to its peers.
Want even more information about VFAIX? 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. 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 Financials Index Admiral (VFAIX) a Strong Mutual Fund Pick Right Now?
Any investors hoping to find a Sector - Finance fund could think about starting with Vanguard Financials Index Admiral (VFAIX - Free Report) . VFAIX has a Zacks Mutual Fund Rank of 2 (Buy), which is based on nine forecasting factors like size, cost, and past performance.
Objective
VFAIX is classified in the Sector - Finance segment by Zacks, and this area is full of possibilities. The financial space is notoriously large, complex, and heavily-regulated, and Sector - Finance mutual funds give investors a stable, diversified approach to investing in this industry. These funds can include everything from banks and investment giants to exchanges and insurance companies, though investors should note that interest rates could have a big impact.
History of Fund/Manager
Vanguard Group is based in Malvern, PA, and is the manager of VFAIX. Vanguard Financials Index Admiral debuted in January of 2004. Since then, VFAIX has accumulated assets of about $593.84 million, according to the most recently available information. The fund is currently managed by William A. Coleman who has been in charge of the fund since December of 2015.
Performance
Of course, investors look for strong performance in funds. This fund has delivered a 5-year annualized total return of 10.65%, and is in the top 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 15.68%, 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. VFAIX's standard deviation over the past three years is 15.92% compared to the category average of 16.83%. The standard deviation of the fund over the past 5 years is 14.65% compared to the category average of 15.29%. This makes the fund less 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. In the most recent bear market, VFAIX lost 71.44% and underperformed comparable funds by 9.94%. This makes the fund a possibly worse choice than its peers during a sliding market environment.
Nevertheless, investors should also note that the fund has a 5-year beta of 1.08, which means 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 -0.72, which shows that 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 principally on equities that are traded in the United States.
Right now, 83.45% of this mutual fund's holdings are stocks, which have an average market capitalization of $96.94 billion. Turnover is about 3%, so those in charge of the fund make fewer trades than its comparable peers.
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, VFAIX is a no load fund. It has an expense ratio of 0.10% compared to the category average of 1.42%. VFAIX is actually cheaper than its peers when you consider factors like cost.
While the minimum initial investment for the product is $100,000, investors should also note that each subsequent investment needs to be at least $1.
Bottom Line
Overall, Vanguard Financials Index Admiral ( VFAIX ) has a high Zacks Mutual Fund rank, strong performance, average downside risk, and lower fees compared to its peers.
Want even more information about VFAIX? 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. 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.