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Having trouble finding a Government Bond - Short fund? Vanguard Short-Term Federal Investor (VSGBX - Free Report) is a potential starting point. VSGBX carries a Zacks Mutual Fund Rank of 1 (Strong Buy), which is based on nine forecasting factors like size, cost, and past performance.
Objective
VSGBX is one of many Government Bond - Short funds to choose from. Often seen as risk-free assets and described as extremely low-risk from a default perspective, Government Bond - Short funds hold securities issued by the federal government of the United States. Focusing on the short end of the curve, this category can result in n lower yields, but less sensitivity to interest rate fluctuations.
History of Fund/Manager
Vanguard Group is based in Malvern, PA, and is the manager of VSGBX. The Vanguard Short-Term Federal Investor made its debut in December of 1987 and VSGBX has managed to accumulate roughly $581.70 million in assets, as of the most recently available information. The fund's current manager, Brian W. Quigley, has been in charge of the fund since January of 2015.
Performance
Obviously, what investors are looking for in these funds is strong performance relative to their peers. This fund carries a 5-year annualized total return of 1.12%, 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 0.99%, 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. Over the past three years, VSGBX's standard deviation comes in at 1.14%, compared to the category average of 5%. Looking at the past 5 years, the fund's standard deviation is 1.08% compared to the category average of 5.26%. 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. VSGBX has a modified duration of 2.18, which suggests that the fund will decline 2.18% for every hundred-basis-point increase in interest rates.
Income
We must remember to consider the fund's average coupon, as income is traditionally a big reason for purchasing a fixed income security. This metric calculates the fund's average payout in a given year. For example, this fund's average coupon of 2.49% means that a $10,000 investment should result in a yearly payout of $249.
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.
Income is only one part of the bond picture, investors also need to consider risk relative to broad benchmarks. This fund has a beta of 0.35, meaning that it is less volatile than a broad market index of fixed income securities. Taking this into account, VSGBX has a negative alpha of -0.28, 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, VSGBX is a no load fund. It has an expense ratio of 0.20% compared to the category average of 0.71%. Looking at the fund from a cost perspective, VSGBX is actually cheaper than its peers.
While the minimum initial investment for the product is $3,000, investors should also note that each subsequent investment needs to be at least $1.
Bottom Line
Overall, Vanguard Short-Term Federal Investor ( VSGBX ) has a high Zacks Mutual Fund rank, strong performance, average downside risk, and lower fees compared to its peers.
For additional information on this product, or to compare it to other mutual funds in the Government Bond - Short, make sure to go to www.zacks.com/funds/mutual-funds for additional information. Zacks provides a full suite of tools to help you analyze your portfolio - both funds and stocks - in the most efficient way possible.
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Is VSGBX a Strong Bond Fund Right Now?
Having trouble finding a Government Bond - Short fund? Vanguard Short-Term Federal Investor (VSGBX - Free Report) is a potential starting point. VSGBX carries a Zacks Mutual Fund Rank of 1 (Strong Buy), which is based on nine forecasting factors like size, cost, and past performance.
Objective
VSGBX is one of many Government Bond - Short funds to choose from. Often seen as risk-free assets and described as extremely low-risk from a default perspective, Government Bond - Short funds hold securities issued by the federal government of the United States. Focusing on the short end of the curve, this category can result in n lower yields, but less sensitivity to interest rate fluctuations.
History of Fund/Manager
Vanguard Group is based in Malvern, PA, and is the manager of VSGBX. The Vanguard Short-Term Federal Investor made its debut in December of 1987 and VSGBX has managed to accumulate roughly $581.70 million in assets, as of the most recently available information. The fund's current manager, Brian W. Quigley, has been in charge of the fund since January of 2015.
Performance
Obviously, what investors are looking for in these funds is strong performance relative to their peers. This fund carries a 5-year annualized total return of 1.12%, 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 0.99%, 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. Over the past three years, VSGBX's standard deviation comes in at 1.14%, compared to the category average of 5%. Looking at the past 5 years, the fund's standard deviation is 1.08% compared to the category average of 5.26%. 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. VSGBX has a modified duration of 2.18, which suggests that the fund will decline 2.18% for every hundred-basis-point increase in interest rates.
Income
We must remember to consider the fund's average coupon, as income is traditionally a big reason for purchasing a fixed income security. This metric calculates the fund's average payout in a given year. For example, this fund's average coupon of 2.49% means that a $10,000 investment should result in a yearly payout of $249.
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.
Income is only one part of the bond picture, investors also need to consider risk relative to broad benchmarks. This fund has a beta of 0.35, meaning that it is less volatile than a broad market index of fixed income securities. Taking this into account, VSGBX has a negative alpha of -0.28, 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, VSGBX is a no load fund. It has an expense ratio of 0.20% compared to the category average of 0.71%. Looking at the fund from a cost perspective, VSGBX is actually cheaper than its peers.
While the minimum initial investment for the product is $3,000, investors should also note that each subsequent investment needs to be at least $1.
Bottom Line
Overall, Vanguard Short-Term Federal Investor ( VSGBX ) has a high Zacks Mutual Fund rank, strong performance, average downside risk, and lower fees compared to its peers.
For additional information on this product, or to compare it to other mutual funds in the Government Bond - Short, make sure to go to www.zacks.com/funds/mutual-funds for additional information. Zacks provides a full suite of tools to help you analyze your portfolio - both funds and stocks - in the most efficient way possible.