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Is VWALX a Strong Bond Fund Right Now?

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If you've been stuck searching for Muni - Bonds funds, consider Vanguard High-Yield Tax-Exempt Admiral (VWALX - Free Report) as a possibility. VWALX bears a Zacks Mutual Fund Rank of 1 (Strong Buy), which is based on nine forecasting factors like size, cost, and past performance.


VWALX is one of many Muni - Bonds funds to choose from. Muni - Bonds funds invest in debt securities issued by states and local municipalities, which are typically used to pay for infrastructure construction, schools, and other government functions. These securities can be backed by taxes (revenue bonds), but others are known as " general obligation " and are not necessarily backed by a defined source. These bonds are especially attractive because of their inherent tax benefits.

History of Fund/Manager

Vanguard Group is based in Malvern, PA, and is the manager of VWALX. Vanguard High-Yield Tax-Exempt Admiral debuted in November of 2001. Since then, VWALX has accumulated assets of about $14.15 billion, according to the most recently available information. The fund is currently managed by Mathew Kiselak who has been in charge of the fund since July of 2010.


Investors naturally seek funds with strong performance. VWALX has a 5-year annualized total return of 4.88% 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 5.3%, 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. VWALX's standard deviation over the past three years is 5.63% compared to the category average of 9.58%. Over the past 5 years, the standard deviation of the fund is 5.09% compared to the category average of 8.32%. This makes the fund less volatile than its peers over the past half-decade.

This fund has a beta of 0.85, meaning that it is less volatile than a broad market index of fixed income securities. Taking this into account, VWALX has a positive alpha of 0.22, which measures performance on a risk-adjusted basis.


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, VWALX has 30.16% in high quality bonds rated at least 'AA' or higher, while 54.81% are of medium quality, with ratings of 'A' to 'BBB'. The fund has an average quality of A, and focuses on high quality securities.


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, VWALX is a no load fund. It has an expense ratio of 0.09% compared to the category average of 0.83%. Looking at the fund from a cost perspective, VWALX is actually cheaper than its peers.

While the minimum initial investment for the product is $50,000, investors should also note that each subsequent investment needs to be at least $1.

Bottom Line

Overall, Vanguard High-Yield Tax-Exempt Admiral ( VWALX ) has a high Zacks Mutual Fund rank, and in conjunction with its comparatively strong performance, average downside risk, and lower fees, this fund looks like a good potential choice for investors right now.

Don't stop here for your research on Muni - Bonds 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 for more information about the world of funds, and feel free to compare VWALX to its peers as well 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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