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Is Vanguard U.S. Growth Fund (VWUSX) a Strong Mutual Fund Pick Right Now?

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If investors are looking at the Mutual Fund Equity Report fund category, Vanguard U.S. Growth Fund (VWUSX - Free Report) could be a potential option. VWUSX holds a Zacks Mutual Fund Rank of 2 (Buy), 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 VWUSX. Since Vanguard U.S. Growth Fund made its debut in August of 1961, VWUSX has garnered more than $8.32 billion in assets. The fund is currently managed by a team of investment professionals.

Performance

Investors naturally seek funds with strong performance. This fund in particular has delivered a 5-year annualized total return of 12.88%, 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 10.14%, 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 VWUSX over the past three years is 26.08% compared to the category average of 18.33%. The standard deviation of the fund over the past 5 years is 22.49% compared to the category average of 16.51%. 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. VWUSX has a 5-year beta of 1.18, which means it is likely to be more volatile than the market average. 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. The fund has produced a negative alpha over the past 5 years of -1.12, which shows 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 largely on equities that are traded in the United States.

Currently, this mutual fund is holding 97.86% stock in stocks, and these companies have an average market capitalization of $451.93 billion. The fund has the heaviest exposure to the following market sectors:

  1. Technology
  2. Retail Trade
Turnover is about 22%, so those in charge of the fund make fewer trades than the average comparable fund.

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, VWUSX is a no load fund. It has an expense ratio of 0.36% compared to the category average of 0.99%. Looking at the fund from a cost perspective, VWUSX is actually cheaper than its peers.

This fund requires a minimum initial investment of $3,000, and each subsequent investment should be at least $1.

Bottom Line

Overall, Vanguard U.S. Growth Fund ( VWUSX ) has a high Zacks Mutual Fund rank, and in conjunction with its comparatively similar performance, worse downside risk, and lower fees, Vanguard U.S. Growth Fund ( VWUSX ) looks like a great potential choice for investors right now.

This could just be the start of your research on VWUSXin the Mutual Fund Equity Report category. Consider going to www.zacks.com/funds/mutual-funds for additional information about this fund, and all the others that we rank 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.


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