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Is Vanguard REIT Index Investor (VGSIX) a Strong Mutual Fund Pick Right Now?

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Looking for an Index fund? You may want to consider Vanguard REIT Index Investor (VGSIX - Free Report) as a possible option. While this fund is not tracked by the Zacks Mutual Fund Rank, we were able to examine other factors like performance, volatility, and cost.

History of Fund/Manager

Vanguard Group is responsible for VGSIX, and the company is based out of Malvern, PA. Vanguard REIT Index Investor debuted in May of 1996. Since then, VGSIX has accumulated assets of about $196.63 million, according to the most recently available information. Gerard O'Reilly is the fund's current manager and has held that role since November of 2001.

Performance

Investors naturally seek funds with strong performance. This fund carries a 5-year annualized total return of 7.36%, and is in the top 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 11.86%, 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. The standard deviation of VGSIX over the past three years is 18.89% compared to the category average of 16.38%. The standard deviation of the fund over the past 5 years is 16.11% compared to the category average of 13.64%. This makes the fund more volatile than its peers over the past half-decade.

Risk Factors

The fund has a 5-year beta of 0.8, so investors should note that it is hypothetically less 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. VGSIX has generated a negative alpha over the past five years of -5.15, demonstrating that managers in this portfolio find it difficult to pick securities that generate better-than-benchmark returns.

Expenses

For investors, taking a closer look at cost-related metrics is key, since costs are increasingly important for mutual fund investing. Competition is heating up in this space, and a lower cost product will likely outperform its otherwise identical counterpart, all things being equal. In terms of fees, VGSIX is a no load fund. It has an expense ratio of 0.26% compared to the category average of 0.78%. VGSIX is actually cheaper than its peers when you consider factors like cost.

This fund requires a minimum initial investment of $0, while there is no minimum for each subsequent investment.

Bottom Line

Don't stop here for your research on Index 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 VGSIX to its peers as well for additional information. If you are more of a stock investor, make sure to also check out our Zacks Rank, and our full suite of tools we have available for novice and professional investors alike.


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