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Any investors hoping to find an Investment Grade Bond - Intermediate fund could think about starting with Vanguard Intermediate-Term Investment-Grade Admiral (VFIDX - Free Report) . VFIDX bears 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 VFIDX in the Investment Grade Bond - Intermediate category, an area rife with potential choices. Investment Grade Bond - Intermediate funds target the middle part of the curve, typically by investing in bonds that mature in more than three years but less than 15 years. At these maturity levels, fixed income instruments have medium duration risk--but they compensate investors with a respectable yield compared to shorter maturity options. Finally, a focus on investment grade ensures that these funds are safer, but yields will be lower than in the junk bond category.
History of Fund/Manager
Vanguard Group is responsible for VFIDX, and the company is based out of Malvern, PA. The Vanguard Intermediate-Term Investment-Grade Admiral made its debut in February of 2001 and VFIDX has managed to accumulate roughly $27.33 billion in assets, as of the most recently available information. The fund's current manager, Samuel C. Martinez, has been in charge of the fund since April of 2018.
Performance
Of course, investors look for strong performance in funds. VFIDX has a 5-year annualized total return of 3.04% and is in the top 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 2.24%, 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. VFIDX's standard deviation over the past three years is 3.09% compared to the category average of 5.93%. Looking at the past 5 years, the fund's standard deviation is 3.09% compared to the category average of 6.17%. 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, and is a metric that's a good way to judge how fixed income securities will respond in a shifting rate environment.
For those that believe interest rates will rise, this is an important factor to consider. VFIDX has a modified duration of 5.39, which suggests that the fund will decline 5.39% for every hundred-basis-point increase in interest rates.
Income
Income is often a big reason for purchasing a fixed income security, so it is important to consider the fund's average coupon. This metric takes a look at the average payout by the fund in a given year. For example, this fund's average coupon of 3.6% means that a $10,000 investment should result in a yearly payout of $360.
A higher coupon is good for those seeking a strong level of current income, but it could also pose a reinvestment risk 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. VFIDX carries a beta of 1, meaning that the fund is volatile than a broad market index of fixed income securities. With this in mind, it has a positive alpha of 0.41, which measures performance on a risk-adjusted basis.
Ratings
Investors should also consider a bond's rating, which is a grade ( 'AAA' to 'D' ) given to a bond that indicates its credit quality. With this letter scale in mind, VFIDX has 37.85% in high quality bonds rated at least 'AA' or higher, while 58.89% are of medium quality, with ratings of 'A' to 'BBB'. The fund has an average quality of A, and focuses on high quality securities.
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, VFIDX is a no load fund. It has an expense ratio of 0.10% compared to the category average of 0.82%. VFIDX is actually cheaper than its peers when you consider factors like cost.
This fund requires a minimum initial investment of $50,000, and each subsequent investment should be at least $1.
Bottom Line
Overall, Vanguard Intermediate-Term Investment-Grade Admiral ( VFIDX ) has a high Zacks Mutual Fund rank, strong performance, average downside risk, and lower fees compared to its peers.
Don't stop here for your research on Investment Grade Bond - 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 VFIDX 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 VFIDX a Strong Bond Fund Right Now?
Any investors hoping to find an Investment Grade Bond - Intermediate fund could think about starting with Vanguard Intermediate-Term Investment-Grade Admiral (VFIDX - Free Report) . VFIDX bears 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 VFIDX in the Investment Grade Bond - Intermediate category, an area rife with potential choices. Investment Grade Bond - Intermediate funds target the middle part of the curve, typically by investing in bonds that mature in more than three years but less than 15 years. At these maturity levels, fixed income instruments have medium duration risk--but they compensate investors with a respectable yield compared to shorter maturity options. Finally, a focus on investment grade ensures that these funds are safer, but yields will be lower than in the junk bond category.
History of Fund/Manager
Vanguard Group is responsible for VFIDX, and the company is based out of Malvern, PA. The Vanguard Intermediate-Term Investment-Grade Admiral made its debut in February of 2001 and VFIDX has managed to accumulate roughly $27.33 billion in assets, as of the most recently available information. The fund's current manager, Samuel C. Martinez, has been in charge of the fund since April of 2018.
Performance
Of course, investors look for strong performance in funds. VFIDX has a 5-year annualized total return of 3.04% and is in the top 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 2.24%, 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. VFIDX's standard deviation over the past three years is 3.09% compared to the category average of 5.93%. Looking at the past 5 years, the fund's standard deviation is 3.09% compared to the category average of 6.17%. 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, and is a metric that's a good way to judge how fixed income securities will respond in a shifting rate environment.
For those that believe interest rates will rise, this is an important factor to consider. VFIDX has a modified duration of 5.39, which suggests that the fund will decline 5.39% for every hundred-basis-point increase in interest rates.
Income
Income is often a big reason for purchasing a fixed income security, so it is important to consider the fund's average coupon. This metric takes a look at the average payout by the fund in a given year. For example, this fund's average coupon of 3.6% means that a $10,000 investment should result in a yearly payout of $360.
A higher coupon is good for those seeking a strong level of current income, but it could also pose a reinvestment risk 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. VFIDX carries a beta of 1, meaning that the fund is volatile than a broad market index of fixed income securities. With this in mind, it has a positive alpha of 0.41, which measures performance on a risk-adjusted basis.
Ratings
Investors should also consider a bond's rating, which is a grade ( 'AAA' to 'D' ) given to a bond that indicates its credit quality. With this letter scale in mind, VFIDX has 37.85% in high quality bonds rated at least 'AA' or higher, while 58.89% are of medium quality, with ratings of 'A' to 'BBB'. The fund has an average quality of A, and focuses on high quality securities.
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, VFIDX is a no load fund. It has an expense ratio of 0.10% compared to the category average of 0.82%. VFIDX is actually cheaper than its peers when you consider factors like cost.
This fund requires a minimum initial investment of $50,000, and each subsequent investment should be at least $1.
Bottom Line
Overall, Vanguard Intermediate-Term Investment-Grade Admiral ( VFIDX ) has a high Zacks Mutual Fund rank, strong performance, average downside risk, and lower fees compared to its peers.
Don't stop here for your research on Investment Grade Bond - 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 VFIDX 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.