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Is Vanguard Selected Value Fund (VASVX) a Strong Mutual Fund Pick Right Now?

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If you have been looking for Mid Cap Value funds, a place to start could be Vanguard Selected Value Fund (VASVX - Free Report) . VASVX holds a Zacks Mutual Fund Rank of 1 (Strong Buy), which is based on nine forecasting factors like size, cost, and past performance.

Objective

We classify VASVX in the Mid Cap Value category, an area rife with potential choices. Mid Cap Value mutual funds aim to target medium-sized companies that possess strong value and income opportunities for investors. A mid-cap company usually holds a market capitalization of between $2 billion and $10 billion.

History of Fund/Manager

Vanguard Group is based in Malvern, PA, and is the manager of VASVX. Vanguard Selected Value Fund made its debut in February of 1996, and since then, VASVX has accumulated about $6.65 billion in assets, per the most up-to-date date available. The fund's current manager is a team of investment professionals.

Performance

Investors naturally seek funds with strong performance. This fund has delivered a 5-year annualized total return of 11.65%, and it sits in the middle third among its category peers. Investors who prefer analyzing shorter time frames should look at its 3-year annualized total return of 10.67%, 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. VASVX's standard deviation over the past three years is 28.23% compared to the category average of 24.6%. Over the past 5 years, the standard deviation of the fund is 22.42% compared to the category average of 19.9%. This makes the fund more volatile than its peers over the past half-decade.

Risk Factors

Investors should not forget about beta, an important way to measure a mutual fund's risk compared to the market as a whole. VASVX has a 5-year beta of 1.34, which means it is likely to be more volatile than the market average. 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 -8.73. This means that managers in this portfolio find it difficult to pick 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 principally on equities that are traded in the United States.

This fund is currently holding about 96.93% stock in stocks, and these companies have an average market capitalization of $13.11 billion. The fund has the heaviest exposure to the following market sectors:

  1. Finance
  2. Industrial Cyclical
  3. Consumer Durables
With turnover at about 32%, this fund is making more trades in a given year than the average of comparable funds.

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, VASVX is a no load fund. It has an expense ratio of 0.33% compared to the category average of 1.11%. So, VASVX 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

Overall, Vanguard Selected Value Fund ( VASVX ) has a high Zacks Mutual Fund rank, and in conjunction with its comparatively similar performance, average downside risk, and lower fees, this fund looks like a good potential choice for investors right now.

For additional information on this product, or to compare it to other mutual funds in the Mid Cap Value, make sure to go to www.zacks.com/funds/mutual-funds 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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