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Is Vanguard Diversified Equity Investor (VDEQX) a Strong Mutual Fund Pick Right Now?

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Any investors hoping to find a Mutual Fund Equity Report fund could think about starting with Vanguard Diversified Equity Investor (VDEQX - Free Report) . VDEQX has a Zacks Mutual Fund Rank of 3 (Hold), which is based on nine forecasting factors like size, cost, and past performance.

History of Fund/Manager

Vanguard Group is based in Malvern, PA, and is the manager of VDEQX. Vanguard Diversified Equity Investor debuted in June of 2005. Since then, VDEQX has accumulated assets of about $2.94 billion, according to the most recently available information. The fund is currently managed by William Coleman who has been in charge of the fund since February of 2013.

Performance

Of course, investors look for strong performance in funds. This fund has delivered a 5-year annualized total return of 19.08%, and it sits in the bottom 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 27.3%, 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. The standard deviation of VDEQX over the past three years is 19.27% compared to the category average of 18.76%. The fund's standard deviation over the past 5 years is 16.88% compared to the category average of 16.92%. This makes the fund less 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. VDEQX has a 5-year beta of 1.07, 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. With a negative alpha of -0.51, managers in this portfolio find it difficult to pick securities that generate better-than-benchmark returns.

Holdings

Investigating 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 primarily on equities that are traded in the United States.

The mutual fund currently has 96.68% of its holdings in stocks and it has a negligible amount of assets in foreign securities. With turnover at about 6%, this fund is making fewer trades than the average comparable fund.

Expenses

Costs are increasingly important for mutual fund investing, and particularly as competition heats up in this market. And all things being equal, a lower cost product will outperform its otherwise identical counterpart, so taking a closer look at these metrics is key for investors. In terms of fees, VDEQX is a no load fund. It has an expense ratio of 0.35% compared to the category average of 0.93%. So, VDEQX is actually cheaper than its peers from a cost perspective.

Investors need to be aware that with this product, the minimum initial investment is $3,000; each subsequent investment needs to be at least $1.

Bottom Line

Overall, Vanguard Diversified Equity Investor ( VDEQX ) has a neutral Zacks Mutual Fund rank, and in conjunction with its comparatively weak performance, average downside risk, and lower fees, this fund looks like a somewhat average choice for investors right now.

Don't stop here for your research on Mutual Fund Equity Report 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 VDEQX to its peers as well 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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