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Is Vanguard Institutional Index Plus (VIIIX) a Strong Mutual Fund Pick Right Now?

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If you've been stuck searching for Mutual Fund Equity Report funds, consider Vanguard Institutional Index Plus (VIIIX - Free Report) as a possibility. VIIIX has no Zacks Mutual Fund Rank, but we have been able to look into other metrics like performance, volatility, and cost.

History of Fund/Manager

Vanguard Group is responsible for VIIIX, and the company is based out of Malvern, PA. Vanguard Institutional Index Plus debuted in July of 1997. Since then, VIIIX has accumulated assets of about $142.04 billion, according to the most recently available information. Donald M. Butler is the fund's current manager and has held that role since December of 2000.

Performance

Obviously, what investors are looking for in these funds is strong performance relative to their peers. This fund carries a 5-year annualized total return of 11.81%, and it sits 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 12.38%, 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. Compared to the category average of 17.52%, the standard deviation of VIIIX over the past three years is 19.45%. Over the past 5 years, the standard deviation of the fund is 17.52% compared to the category average of 15.72%. This makes the fund more volatile than its peers over the past half-decade.

Risk Factors

Investors should note that the fund has a 5-year beta of 0.99, which means it is hypothetically as volatile as 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. Over the past 5 years, the fund has a positive alpha of 0.02. This means that managers in this portfolio are skilled in picking 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.

The mutual fund currently has 99% of its holdings in stocks, which have an average market capitalization of $318.77 billion. The fund has the heaviest exposure to the following market sectors:

  1. Technology
  2. Finance
With turnover at about 3%, this fund makes fewer trades than its comparable peers.

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, VIIIX is a no load fund. It has an expense ratio of 0.02% compared to the category average of 0.79%. Looking at the fund from a cost perspective, VIIIX is actually cheaper than its peers.

This fund requires a minimum initial investment of $100 million, and each subsequent investment should be at least $1.

Bottom Line

For additional information on this product, or to compare it to other mutual funds in the Mutual Fund Equity Report, 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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