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If you have been looking for Government Mortgage - Intermediate funds, it would not be wise to start your search with Vanguard GNMA Admiral (VFIJX - Free Report) . VFIJX carries a Zacks Mutual Fund Rank of 4 (Sell), which is based on nine forecasting factors like size, cost, and past performance.
Objective
VFIJX is one of many Government Mortgage - Intermediate funds to choose from. Government Mortgage - Intermediate funds focus on the mortgage-backed securities (MBS) market. This market takes mortgages, packages them together, and sells off the pooled securities to investors. This particular category focuses on MBS that usually have at least three years to maturity, but less than 10, giving a medium risk and yield profile to funds here.
History of Fund/Manager
VFIJX finds itself in the Vanguard Group family, based out of Malvern, PA. The Vanguard GNMA Admiral made its debut in February of 2001 and VFIJX has managed to accumulate roughly $15.03 billion in assets, as of the most recently available information. Michael Garrett is the fund's current manager and has held that role since June of 2010.
Performance
Of course, investors look for strong performance in funds. This fund has delivered a 5-year annualized total return of 2.43%, 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 1.41%, 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 VFIJX over the past three years is 2.18% compared to the category average of 5.74%. Over the past 5 years, the standard deviation of the fund is 2.09% compared to the category average of 5.87%. This makes the fund less volatile than its peers over the past half-decade.
Bond Duration
Modified duration is a measure of a given bond's interest rate sensitivity, so when judging how fixed income securities will respond in a shifting rate environment, it is an excellent figure to look at.
For those that believe interest rates will rise, this is an important factor to consider. VFIJX has a modified duration of 3.96, which suggests that the fund will decline 3.96% for every hundred-basis-point increase in interest rates.
Income
It is important to consider the fund's average coupon because income is often a big reason for purchasing a fixed income security. Average coupon is a look at the average payout by the fund in a given year. For example, this fund's average coupon of 3.63% means that a $10,000 investment should result in a yearly payout of $363.
For those seeking a strong level of current income, a higher coupon is typically good news. However, it could pose a reinvestment risk if rates are lower in the future when compared to the initial purchase date of the bond.
Investors also need to consider risk relative to broad benchmarks, as income is only one part of the bond picture. With a beta of 0.68, this fund is less volatile than a broad market index of fixed income securities. Taking this into account, VFIJX has a positive alpha of 0.35, 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, VFIJX is a no load fund. It has an expense ratio of 0.11% compared to the category average of 0.84%. Looking at the fund from a cost perspective, VFIJX 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 GNMA Admiral ( VFIJX ) has a low Zacks Mutual Fund rank, strong performance, average downside risk, and lower fees compared to its peers.
Don't stop here for your research on Government Mortgage - Intermediate funds. We also have plenty more on our site in order to help you find the best possible fund for your portfolio. Make sure to check out www.zacks.com/funds/mutual-funds for more information about the world of funds, and feel free to compare VFIJX to its peers as well for additional information. If you want to check out our stock reports as well, make sure to go to Zacks.com to see all of the great tools we have to offer, including our time-tested Zacks Rank.
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Is VFIJX a Strong Bond Fund Right Now?
If you have been looking for Government Mortgage - Intermediate funds, it would not be wise to start your search with Vanguard GNMA Admiral (VFIJX - Free Report) . VFIJX carries a Zacks Mutual Fund Rank of 4 (Sell), which is based on nine forecasting factors like size, cost, and past performance.
Objective
VFIJX is one of many Government Mortgage - Intermediate funds to choose from. Government Mortgage - Intermediate funds focus on the mortgage-backed securities (MBS) market. This market takes mortgages, packages them together, and sells off the pooled securities to investors. This particular category focuses on MBS that usually have at least three years to maturity, but less than 10, giving a medium risk and yield profile to funds here.
History of Fund/Manager
VFIJX finds itself in the Vanguard Group family, based out of Malvern, PA. The Vanguard GNMA Admiral made its debut in February of 2001 and VFIJX has managed to accumulate roughly $15.03 billion in assets, as of the most recently available information. Michael Garrett is the fund's current manager and has held that role since June of 2010.
Performance
Of course, investors look for strong performance in funds. This fund has delivered a 5-year annualized total return of 2.43%, 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 1.41%, 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 VFIJX over the past three years is 2.18% compared to the category average of 5.74%. Over the past 5 years, the standard deviation of the fund is 2.09% compared to the category average of 5.87%. This makes the fund less volatile than its peers over the past half-decade.
Bond Duration
Modified duration is a measure of a given bond's interest rate sensitivity, so when judging how fixed income securities will respond in a shifting rate environment, it is an excellent figure to look at.
For those that believe interest rates will rise, this is an important factor to consider. VFIJX has a modified duration of 3.96, which suggests that the fund will decline 3.96% for every hundred-basis-point increase in interest rates.
Income
It is important to consider the fund's average coupon because income is often a big reason for purchasing a fixed income security. Average coupon is a look at the average payout by the fund in a given year. For example, this fund's average coupon of 3.63% means that a $10,000 investment should result in a yearly payout of $363.
For those seeking a strong level of current income, a higher coupon is typically good news. However, it could pose a reinvestment risk if rates are lower in the future when compared to the initial purchase date of the bond.
Investors also need to consider risk relative to broad benchmarks, as income is only one part of the bond picture. With a beta of 0.68, this fund is less volatile than a broad market index of fixed income securities. Taking this into account, VFIJX has a positive alpha of 0.35, 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, VFIJX is a no load fund. It has an expense ratio of 0.11% compared to the category average of 0.84%. Looking at the fund from a cost perspective, VFIJX 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 GNMA Admiral ( VFIJX ) has a low Zacks Mutual Fund rank, strong performance, average downside risk, and lower fees compared to its peers.
Don't stop here for your research on Government Mortgage - Intermediate funds. We also have plenty more on our site in order to help you find the best possible fund for your portfolio. Make sure to check out www.zacks.com/funds/mutual-funds for more information about the world of funds, and feel free to compare VFIJX to its peers as well for additional information. If you want to check out our stock reports as well, make sure to go to Zacks.com to see all of the great tools we have to offer, including our time-tested Zacks Rank.