Back to top

Image: Bigstock

Is Vanguard Value Index Investor (VIVAX) a Strong Mutual Fund Pick Right Now?

Read MoreHide Full Article

Looking for a Large Cap Value fund? You may want to consider Vanguard Value Index Investor (VIVAX - Free Report) as a possible option. VIVAX has no Zacks Mutual Fund Rank, but we have been able to look into other metrics like performance, volatility, and cost.

Objective

VIVAX is one of many Large Cap Value mutual funds to choose from. These funds invest in equities with a market capitalization of $10 billion or more, but whose share prices do not reflect their intrinsic value. This strategy can often produce low P/E ratios and high dividend yields; growth levels; however, growth levels are oftentimes cut back. These funds'high growth opportunities are slowed even more since large-cap stocks are usually in more stable industries with low to moderate growth prospects. Thus, investors interested in a stable income stream fund Large Cap Value funds very appealing.

History of Fund/Manager

Vanguard Group is based in Malvern, PA, and is the manager of VIVAX. Vanguard Value Index Investor debuted in November of 1992. Since then, VIVAX has accumulated assets of about $265.86 million, according to the most recently available information. The fund's current manager, Gerard O'Reilly, has been in charge of the fund since November of 2000.

Performance

Investors naturally seek funds with strong performance. This fund carries a 5-year annualized total return of 11.51%, and it sits in the middle third among its category peers. Investors who prefer analyzing shorter time frames should look at its 3-year annualized total return of 4.72%, 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. VIVAX's standard deviation over the past three years is 18.81% compared to the category average of 15.67%. Over the past 5 years, the standard deviation of the fund is 15.31% compared to the category average of 13.24%. This makes the fund more volatile than its peers over the past half-decade.

Risk Factors

The fund has a 5-year beta of 0.98, so investors should note that it is hypothetically as volatile as the market at large. Because alpha represents a portfolio's performance on a risk-adjusted basis relative to a benchmark, which is the S&P 500 in this case, one should pay attention to this metric as well. With a negative alpha of -3.68, managers in this portfolio find it difficult to pick securities that generate better-than-benchmark returns.

Holdings

Examining the equity holdings of a mutual fund is also a valuable exercise. This can show us how the manager is applying their stated methodology, as well as if there are any inherent biases in their approach. For this particular fund, the focus is primarily on equities that are traded in the United States.

Currently, this mutual fund is holding 82% stock in stocks, and these companies have an average market capitalization of $123.70 billion. The fund has the heaviest exposure to the following market sectors:

  1. Finance
  2. Non-Durable
  3. Industrial Cyclical
  4. Technology
  5. Health
This fund's turnover is about 8%, so the fund managers are making fewer trades than the average comparable fund.

Expenses

Costs are increasingly important for mutual fund investing, and particularly as competition heats up in this market. And all things being equal, a lower cost product will outperform its otherwise identical counterpart, so taking a closer look at these metrics is key for investors. In terms of fees, VIVAX is a no load fund. It has an expense ratio of 0.17% compared to the category average of 0.99%. So, VIVAX is actually cheaper than its peers from a cost perspective.

Investors should also note that the minimum initial investment for the product is $0 and that each subsequent investment has no minimum amount.

Bottom Line

For additional information on the Large Cap Value area of the mutual fund world, make sure to check out www.zacks.com/funds/mutual-funds. There, you can see more about the ranking process, and dive even deeper into VIVAX too for additional information. For analysis of the rest of your portfolio, make sure to visit Zacks.com for our full suite of tools which will help you investigate all of your stocks and funds in one place.


See More Zacks Research for These Tickers


Normally $25 each - click below to receive one report FREE:


Vanguard Value Index Inv (VIVAX) - free report >>

Published in