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Is Vanguard Value Index Admiral (VVIAX) a Strong Mutual Fund Pick Right Now?

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Investors in search of a Large Cap Value fund might want to consider looking at Vanguard Value Index Admiral (VVIAX - 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.

Objective

VVIAX 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 VVIAX. The Vanguard Value Index Admiral made its debut in November of 2000 and VVIAX has managed to accumulate roughly $27.45 billion in assets, as of the most recently available information. The fund is currently managed by Gerard O'Reilly who has been in charge of the fund since November of 2000.

Performance

Of course, investors look for strong performance in funds. This fund in particular has delivered a 5-year annualized total return of 13.15%, and it sits in the middle 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 12.53%, 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 VVIAX over the past three years is 19% compared to the category average of 15.57%. Looking at the past 5 years, the fund's standard deviation is 15.45% compared to the category average of 12.93%. This makes the fund more volatile than its peers over the past half-decade.

Risk Factors

Investors should note that the fund has a 5-year beta of 0.98, so it is likely going to be 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. Over the past 5 years, the fund has a negative alpha of -3.36. This means that 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 mostly on equities that are traded in the United States.

The mutual fund currently has 90.95% of its holdings in stocks, and these companies have an average market capitalization of $127.42 billion. The fund has the heaviest exposure to the following market sectors:

  1. Finance
  2. Non-Durable
  3. Health
  4. Industrial Cyclical
  5. Technology
This fund's turnover is about 10%, so the fund managers are making fewer trades than its comparable peers.

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, VVIAX is a no load fund. It has an expense ratio of 0.05% compared to the category average of 1%. So, VVIAX is actually cheaper than its peers from a cost perspective.

This fund requires a minimum initial investment of $3,000, and each subsequent investment should be at least $1.

Bottom Line

This could just be the start of your research on VVIAXin the Large Cap Value category. Consider going to www.zacks.com/funds/mutual-funds for additional information about this fund, and all the others that we rank as well 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.


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