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Is VAIPX a Strong Bond Fund Right Now?

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Having trouble finding a Government - Bonds: Misc fund? Vanguard Inflation Pro Security Admiral (VAIPX - Free Report) is a possible starting point. VAIPX possesses a Zacks Mutual Fund Rank of 3 (Hold), which is based on nine forecasting factors like size, cost, and past performance.

Objective

We note that VAIPX is a Government - Bonds: Misc option, and this area is loaded with many different choices. Often seen as risk-free assets and described as extremely low-risk from a default perspective, Government - Bonds: Misc funds hold securities issued by the United States' federal government. This category stretches across the curve, meaning the yields and interest rate sensitivity will vary, but a mixed approach can typically result in a medium yield and risk profile.

History of Fund/Manager

Vanguard Group is based in Malvern, PA, and is the manager of VAIPX. Vanguard Inflation Pro Security Admiral debuted in June of 2005. Since then, VAIPX has accumulated assets of about $17.80 billion, according to the most recently available information. Gemma Wright Casparius is the fund's current manager and has held that role since August of 2011.

Performance

Investors naturally seek funds with strong performance. This fund has delivered a 5-year annualized total return of 4.51%, and it sits 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 5.68%, 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. The standard deviation of VAIPX over the past three years is 3.69% compared to the category average of 10.85%. The standard deviation of the fund over the past 5 years is 3.55% compared to the category average of 9.39%. This makes the fund less volatile than its peers over the past half-decade.

This fund has a beta of 0.9, meaning that it is less volatile than a broad market index of fixed income securities. Taking this into account, VAIPX has a positive 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, VAIPX is a no load fund. It has an expense ratio of 0.10% compared to the category average of 0.88%. From a cost perspective, VAIPX is actually cheaper than its peers.

This fund requires a minimum initial investment of $50,000, and each subsequent investment should be at least $1.

Bottom Line

Overall, Vanguard Inflation Pro Security Admiral ( VAIPX ) has a neutral Zacks Mutual Fund rank, and in conjunction with its comparatively strong performance, better downside risk, and lower fees, this fund looks like a somewhat average choice for investors right now.

For additional information on this product, or to compare it to other mutual funds in the Government - Bonds: Misc, 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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