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Is Vanguard Target Retirement 2030 Fund (VTHRX) a Strong Mutual Fund Pick Right Now?

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If you've been stuck searching for Target Date funds, consider Vanguard Target Retirement 2030 Fund (VTHRX - Free Report) as a possibility. While this fund is not tracked by the Zacks Mutual Fund Rank, we were able to examine other factors like performance, volatility, and cost.

History of Fund/Manager

VTHRX is a part of the Vanguard Group family of funds, a company based out of Malvern, PA. The Vanguard Target Retirement 2030 Fund made its debut in June of 2006 and VTHRX has managed to accumulate roughly $36.46 billion in assets, as of the most recently available information. The fund is currently managed by William A. Coleman who has been in charge of the fund since February of 2013.

Performance

Obviously, what investors are looking for in these funds is strong performance relative to their peers. VTHRX has a 5-year annualized total return of 5.59% and it sits 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 7.8%, 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. Over the past three years, VTHRX's standard deviation comes in at 7.73%, compared to the category average of 7.46%. The fund's standard deviation over the past 5 years is 8.2% compared to the category average of 8.09%. 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. In VTHRX's case, the fund lost 45.96% in the most recent bear market and underperformed comparable funds by 0.32%. This could mean that the fund is a worse choice than comparable funds during a bear market.

Nevertheless, investors should also note that the fund has a 5-year beta of 0.67, which means it is hypothetically less volatile than the market at large. Alpha is an additional metric to take into consideration, since it represents a portfolio's performance on a risk-adjusted basis relative to a benchmark, which in this case, is the S&P 500. VTHRX's 5-year performance has produced a negative alpha of -1.16, which means managers in this portfolio find it difficult to pick securities that generate better-than-benchmark returns.

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, VTHRX is a no load fund. It has an expense ratio of 0.08% compared to the category average of 0.47%. From a cost perspective, VTHRX is actually cheaper than its peers.

Investors should also note that the minimum initial investment for the product is $1,000 and that each subsequent investment needs to be at $1.

Bottom Line

Want even more information about VTHRX? 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. If you are more of a stock investor, make sure to also check out our Zacks Rank, and our full suite of tools we have available for novice and professional investors alike.


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