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Is VWITX a Strong Bond Fund Right Now?

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Looking for a Muni - Bonds fund? You may want to consider Vanguard Intermediate-Term Tax-Exempt Investor (VWITX - Free Report) as a possible option. VWITX carries a Zacks Mutual Fund Rank of 3 (Hold), which is based on nine forecasting factors like size, cost, and past performance.

Objective

Zacks categorizes VWITX as Muni - Bonds, which is a segment packed with options. Muni - Bonds funds invest in debt securities issued by states or local municipalities. These are generally used to finance construction of infrastructure, pay for schools, or other government functions. Some are backed by taxes (revenue bonds), while others are " general obligation " and may not be backed by a defined source. Investors usually appreciate the tax benefits that come with many municipal bonds, which are especially impressive for those in high tax brackets.

History of Fund/Manager

VWITX finds itself in the Vanguard Group family, based out of Malvern, PA. Vanguard Intermediate-Term Tax-Exempt Investor made its debut in September of 1977, and since then, VWITX has accumulated about $3.56 billion in assets, per the most up-to-date date available. The fund's current manager, James D'Arcy, has been in charge of the fund since June of 2013.

Performance

Investors naturally seek funds with strong performance. This fund has delivered a 5-year annualized total return of 3.19%, and is in the top third among its category peers. Investors who prefer analyzing shorter time frames should look at its 3-year annualized total return of 4.75%, 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. VWITX's standard deviation over the past three years is 3.55% compared to the category average of 9.52%. The fund's standard deviation over the past 5 years is 3.53% compared to the category average of 8.13%. This makes the fund less volatile than its peers over the past half-decade.

VWITX carries a beta of 0.55, meaning that the fund is less volatile than a broad market index of fixed income securities. With this in mind, it has a negative alpha of -0.08, which measures performance on a risk-adjusted basis.

Ratings

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, VWITX has 43.92% in high quality bonds rated at least 'AA' or higher, while 49.52% are of medium quality, with ratings of 'A' to 'BBB'. The fund has an average quality of A, and focuses on high quality securities.

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, VWITX is a no load fund. It has an expense ratio of 0.17% compared to the category average of 0.80%. VWITX is actually cheaper than its peers when you consider factors like cost.

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

Bottom Line

Overall, Vanguard Intermediate-Term Tax-Exempt Investor ( VWITX ) has a neutral Zacks Mutual Fund rank, and in conjunction with its comparatively strong performance, average downside risk, and lower fees, this fund looks like a somewhat average choice for investors right now.

This could just be the start of your research on VWITXin the Muni - Bonds 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. Want to learn even more? We have a full suite of tools on stocks that you can use to find the best choices for your portfolio too, no matter what kind of investor you are.


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