There are plenty of choices in the Sector - Precious Metal category, but where should you start your research? Well, one fund that may not be worth investigating is Vanguard Precious Metals & Mining (
VGPMX Quick Quote VGPMX - Free Report) . 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 responsible for VGPMX, and the company is based out of Malvern, PA. Vanguard Precious Metals & Mining debuted in May of 1984. Since then, VGPMX has accumulated assets of about $1.32 billion, according to the most recently available information. The fund's current manager, Keith White, has been in charge of the fund since July of 2018.
Of course, investors look for strong performance in funds. VGPMX has a 5-year annualized total return of -1.25% and is in the bottom 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 6.84%, 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. Over the past three years, VGPMX's standard deviation comes in at 21.49%, compared to the category average of 18.6%. The fund's standard deviation over the past 5 years is 21.23% compared to the category average of 15.16%. This makes the fund more volatile than its peers over the past half-decade.
The fund has a 5-year beta of 0.88, so investors should note that it is hypothetically less 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. The fund has produced a negative alpha over the past 5 years of -13.5, which shows that managers in this portfolio find it difficult to pick securities that generate better-than-benchmark returns.
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 1.37%. Looking at the fund from a cost perspective, VGPMX is actually cheaper than its peers.
While the minimum initial investment for the product is $3,000, investors should also note that each subsequent investment needs to be at least $1.
Overall, Vanguard Precious Metals & Mining ( VGPMX ) has a low Zacks Mutual Fund rank, and in conjunction with its comparatively weak 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. If you want to check out our stock reports as well, make sure to go to Zacks.com to see all of the great tools we have to offer, including our time-tested Zacks Rank.