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Is Vanguard Precious Metals & Mining (VGPMX) a Strong Mutual Fund Pick Right Now?

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Having trouble finding a Sector - Precious Metal fund? Well, Vanguard Precious Metals & Mining (VGPMX - Free Report) would not be a good potential starting point right now. VGPMX has a Zacks Mutual Fund Rank of 5 (Strong Sell), which is based on nine forecasting factors like size, cost, and past performance.

Objective

We note that VGPMX is a Sector - Precious Metal option, and this area is loaded with different options. Sector - Precious Metal funds typically invest in companies that are involved in the mining and production of precious metals like gold, silver, platinum, and palladium. Because stocks in this environment often trade as leveraged bets of the underlying commodity--they are tied to the prices of the metal--these equities tend to be volatile.

History of Fund/Manager

Vanguard Group is based in Malvern, PA, and is the manager of VGPMX. The Vanguard Precious Metals & Mining made its debut in May of 1984 and VGPMX has managed to accumulate roughly $1.18 billion in assets, as of the most recently available information. The fund's current manager, Keith White, has been in charge of the fund since July of 2018.

Performance

Investors naturally seek funds with strong performance. This fund has delivered a 5-year annualized total return of 10.95%, and it sits in the middle 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 -1.02%, which places it in the bottom 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. Compared to the category average of 18.63%, the standard deviation of VGPMX over the past three years is 21.63%. Looking at the past 5 years, the fund's standard deviation is 28.67% compared to the category average of 15.49%. This makes the fund more volatile than its peers over the past half-decade.

Risk Factors

Investors should not forget about beta, an important way to measure a mutual fund's risk compared to the market as a whole. VGPMX has a 5-year beta of 0.85, which means it is likely to be less volatile than the market average. Another factor to consider is alpha, as it reflects a portfolio's performance on a risk-adjusted basis relative to a benchmark-in this case, the S&P 500. VGPMX has generated a positive alpha over the past five years of 0.33, demonstrating that managers in this portfolio are skilled in picking securities that generate better-than-benchmark returns.

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, VGPMX is a no load fund. It has an expense ratio of 0.35% compared to the category average of 1.39%. VGPMX is actually cheaper than its peers when you consider factors like cost.

Investors should also note that the minimum initial investment for the product is $3,000 and that each subsequent investment needs to be at $1.

Bottom Line

Overall, Vanguard Precious Metals & Mining ( VGPMX ) has a low Zacks Mutual Fund rank, and in conjunction with its comparatively similar performance, worse downside risk, and lower fees, Vanguard Precious Metals & Mining ( VGPMX ) looks like a somewhat weak choice for investors right now.

Don't stop here for your research on Sector - Precious Metal 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 www.zacks.com/funds/mutual-funds for more information about the world of funds, and feel free to compare VGPMX to its peers as well 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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