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Is Vanguard Total Bond Market Index Investor (VBMFX) a Strong Mutual Fund Pick Right Now?

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There are plenty of choices in the Index category, but where should you start your research? Well, one fund that might be worth investigating is Vanguard Total Bond Market Index Investor (VBMFX - Free Report) . While this fund is not tracked by the Zacks Mutual Fund Rank, we were able to examine other factors like performance, volatility, and cost.

History of Fund/Manager

Vanguard Group is based in Malvern, PA, and is the manager of VBMFX. Vanguard Total Bond Market Index Investor debuted in December of 1986. Since then, VBMFX has accumulated assets of about $1.47 billion, according to the most recently available information. The fund's current manager, Joshua Barrickman, has been in charge of the fund since February of 2013.

Performance

Investors naturally seek funds with strong performance. This fund in particular has delivered a 5-year annualized total return of 2.97%, and is 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 4.52%, 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. The standard deviation of VBMFX over the past three years is 3.62% compared to the category average of 12.63%. Looking at the past 5 years, the fund's standard deviation is 3.4% compared to the category average of 10.7%. This makes the fund less volatile than its peers over the past half-decade.

Risk Factors

Investors should note that the fund has a 5-year beta of 1.04, so it is likely going to be more volatile than the market at large. 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. Over the past 5 years, the fund has a negative alpha of -0.21. This means that managers in this portfolio find it difficult to pick 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, VBMFX is a no load fund. It has an expense ratio of 0.15% compared to the category average of 0.80%. VBMFX is actually cheaper than its peers when you consider factors like cost.

This fund requires a minimum initial investment of $0, and each subsequent investment should be at least $1.

Bottom Line

Don't stop here for your research on Index 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 VBMFX 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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