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If you have been looking for Investment Grade Bond - Long funds, a place to start could be Vanguard Long-Term Investment-Grade Income Admiral (VWETX - Free Report) . VWETX holds a Zacks Mutual Fund Rank of 2 (Buy), which is based on nine forecasting factors like size, cost, and past performance.
Objective
VWETX is classified in the Investment Grade Bond - Long segment by Zacks, an area full of possibilities. Investment Grade Bond - Long funds focus on the long end of the curve, typically by investing in bonds that mature in more than 10 years. While fixed income instruments at this maturity level usually have high duration risk, they compensate investors with a larger yield than their short-maturity counterparts. These funds tend to be safer due to their focus on investment grade, but yields will be smaller than funds in the junk bond category.
History of Fund/Manager
VWETX finds itself in the Vanguard Group family, based out of Malvern, PA. The Vanguard Long-Term Investment-Grade Income Admiral made its debut in February of 2001 and VWETX has managed to accumulate roughly $14.56 billion in assets, as of the most recently available information. The fund is currently managed by a team of investment professionals.
Performance
Of course, investors look for strong performance in funds. VWETX has a 5-year annualized total return of 5.75% 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 8.32%, 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. VWETX's standard deviation over the past three years is 7.16% compared to the category average of -4.85%. Over the past 5 years, the standard deviation of the fund is 7.9% compared to the category average of -10.32%. This makes the fund more volatile than its peers over the past half-decade.
Bond Duration
Modified duration is a measure of a specific bond's interest rate sensitivity, and is an excellent way to judge how fixed income securities will respond to a shifting rate environment.
For investors who think interest rates will rise, this is an important factor to consider. VWETX has a modified duration of 14.2, which suggests that the fund will decline 14.2% 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. Average coupon is a look at the average payout by the fund in a given year. For example, this fund's average coupon of 4.63% means that a $10,000 investment should result in a yearly payout of $463.
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.
Because income is only one part of the bond picture, investors should also consider risk relative to broad benchmarks. This fund has a beta of 2.38, meaning that it is more volatile than a broad market index of fixed income securities. Taking this into account, VWETX has a negative alpha of -0.01, 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, VWETX has 33.78% in high quality bonds rated at least 'AA' or higher, while 65.28% 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
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, VWETX is a no load fund. It has an expense ratio of 0.12% compared to the category average of 0.26%. So, VWETX is actually cheaper than its peers from a cost perspective.
Investors should also note that the minimum initial investment for the product is $50,000 and that each subsequent investment needs to be at $1.
Bottom Line
Overall, Vanguard Long-Term Investment-Grade Income Admiral ( VWETX ) has a high Zacks Mutual Fund rank, and in conjunction with its comparatively strong performance, worse downside risk, and lower fees, this fund looks like a good potential choice for investors right now.
For additional information on this product, or to compare it to other mutual funds in the Investment Grade Bond - Long, make sure to go to www.zacks.com/funds/mutual-funds 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 VWETX a Strong Bond Fund Right Now?
If you have been looking for Investment Grade Bond - Long funds, a place to start could be Vanguard Long-Term Investment-Grade Income Admiral (VWETX - Free Report) . VWETX holds a Zacks Mutual Fund Rank of 2 (Buy), which is based on nine forecasting factors like size, cost, and past performance.
Objective
VWETX is classified in the Investment Grade Bond - Long segment by Zacks, an area full of possibilities. Investment Grade Bond - Long funds focus on the long end of the curve, typically by investing in bonds that mature in more than 10 years. While fixed income instruments at this maturity level usually have high duration risk, they compensate investors with a larger yield than their short-maturity counterparts. These funds tend to be safer due to their focus on investment grade, but yields will be smaller than funds in the junk bond category.
History of Fund/Manager
VWETX finds itself in the Vanguard Group family, based out of Malvern, PA. The Vanguard Long-Term Investment-Grade Income Admiral made its debut in February of 2001 and VWETX has managed to accumulate roughly $14.56 billion in assets, as of the most recently available information. The fund is currently managed by a team of investment professionals.
Performance
Of course, investors look for strong performance in funds. VWETX has a 5-year annualized total return of 5.75% 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 8.32%, 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. VWETX's standard deviation over the past three years is 7.16% compared to the category average of -4.85%. Over the past 5 years, the standard deviation of the fund is 7.9% compared to the category average of -10.32%. This makes the fund more volatile than its peers over the past half-decade.
Bond Duration
Modified duration is a measure of a specific bond's interest rate sensitivity, and is an excellent way to judge how fixed income securities will respond to a shifting rate environment.
For investors who think interest rates will rise, this is an important factor to consider. VWETX has a modified duration of 14.2, which suggests that the fund will decline 14.2% 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. Average coupon is a look at the average payout by the fund in a given year. For example, this fund's average coupon of 4.63% means that a $10,000 investment should result in a yearly payout of $463.
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.
Because income is only one part of the bond picture, investors should also consider risk relative to broad benchmarks. This fund has a beta of 2.38, meaning that it is more volatile than a broad market index of fixed income securities. Taking this into account, VWETX has a negative alpha of -0.01, 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, VWETX has 33.78% in high quality bonds rated at least 'AA' or higher, while 65.28% 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
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, VWETX is a no load fund. It has an expense ratio of 0.12% compared to the category average of 0.26%. So, VWETX is actually cheaper than its peers from a cost perspective.
Investors should also note that the minimum initial investment for the product is $50,000 and that each subsequent investment needs to be at $1.
Bottom Line
Overall, Vanguard Long-Term Investment-Grade Income Admiral ( VWETX ) has a high Zacks Mutual Fund rank, and in conjunction with its comparatively strong performance, worse downside risk, and lower fees, this fund looks like a good potential choice for investors right now.
For additional information on this product, or to compare it to other mutual funds in the Investment Grade Bond - Long, make sure to go to www.zacks.com/funds/mutual-funds 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.