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Is Vanguard Information Technology Index Admiral (VITAX) a Strong Mutual Fund Pick Right Now?

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Any investors who are searching for Sector - Tech funds should take a look at Vanguard Information Technology Index Admiral (VITAX - Free Report) . The fund does not have a Zacks Mutual Fund Rank, though we have been able to explore other metrics like performance, volatility, and cost.

Objective

The world of Sector - Tech funds is an area filled with options, and VITAX is one of them. Sector - Tech mutual funds allow investors to own a stake in a notoriously volatile sector with a much more diversified approach. Tech companies can be in any number of industries such as semiconductors, software, internet, networking just to name a few.

History of Fund/Manager

Vanguard Group is based in Malvern, PA, and is the manager of VITAX. Vanguard Information Technology Index Admiral made its debut in January of 2004, and since then, VITAX has accumulated about $6.62 billion in assets, per the most up-to-date date available. The fund is currently managed by Walter Nejman who has been in charge of the fund since December of 2015.

Performance

Obviously, what investors are looking for in these funds is strong performance relative to their peers. This fund carries a 5-year annualized total return of 31.55%, 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 31.48%, 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. VITAX's standard deviation over the past three years is 21.72% compared to the category average of 16.69%. Looking at the past 5 years, the fund's standard deviation is 18.02% compared to the category average of 13.97%. 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 1.07, which means it is hypothetically more volatile than the market at large. Alpha is an additional metric to take into consideration, since it represents a portfolio's performance on a risk-adjusted basis relative to a benchmark, which in this case, is the S&P 500. VITAX has generated a positive alpha over the past five years of 11.21, demonstrating that managers in this portfolio are skilled in picking securities that generate better-than-benchmark returns.

Holdings

Exploring 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 largely on equities that are traded in the United States.

As of the last filing date, the mutual fund has 77.37% of its assets in stocks, which have an average market capitalization of $423.96 billion. Turnover is 2%, which means, on average, the fund makes fewer trades than the average comparable fund.

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, VITAX is a no load fund. It has an expense ratio of 0.10% compared to the category average of 1.35%. So, VITAX is actually cheaper than its peers from a cost perspective.

While the minimum initial investment for the product is $100,000, investors should also note that each subsequent investment needs to be at least $1.

Bottom Line

For additional information on the Sector - Tech 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 VITAX too 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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