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Vanguard, the biggest fund family of the U.S. in terms of asset under management, performed favorably in 2016. As per spokesman John Woerth’s email, Vanguard attracted total investment of around $305 billion in 2016, beating its previous record level of $276.4 billion in the preceding year.
Additionally, strong recovery in markets following Donald Trump’s victory in the U.S. Presidential election also benefited Vanguard, which manages a large number of index and sector funds. Further, Fed’s decision to raise rates and major oil producing nations coming to a consensus to freeze crude production boosted the equity-based fund market.
What Boosted Vanguard Fund’s Performance?
The passively managed funds registered total inflows of around $428.6 billion in the first 11 months of 2016, in contrast to total outflows of $286 billion in active funds during the same period. Strong investments in passive funds had a positive impact on the market leader of passively managed funds, Vanguard.
Moreover, Vanguard has decided to reduce expense fees for 35 funds, which is believed to help investors interested in low cost funds. On this matter, CEO Bill McNabb said that Vanguard has “announced reductions across” its product offerings which include “mutual fund and ETF, index and active, stock and bond, domestic and international.”
Additionally, Vanguard Total Stock Market Index Investor (VTSMX - Free Report) , the largest fund by asset size, climbed 1.4% in the year-to-date frame (as of Jan 6). VTSMX also has a low expense ratio of only 0.16% making it a strong bet for investors.
Sectors Contributing to Vanguard’s Gains
Vanguard invests in a variety of sectors that are sensitive, cyclical and defensive. From the sensitive sectors, most investment is made in the technology sector. In the cyclical sectors, the fund family invests the maximum in the financial sector, which is expected to move up on the back of Trump’s financial regulations and a higher-rate environment.
Technology Select Sector SPDR (XLK) climbed 16.3% in the last one-year period. Also, the technology mutual fund posted a one-year positive return of 15.7%, according to Morningstar.
Additionally, Financial Select Sector SPDR (XLF) jumped 23.2% in the last one-year period and was one of the best gainers among the S&P 500 sectors. Per Morningstar, the financial mutual fund posted a one-year positive return of 22.4%.
Buy These 5 Strong Vanguard Mutual Funds
Vanguard is one of the world’s largest investment management company, founded by John C. Bogle in 1975. It manages more than $3.58 trillion in assets and offers nearly 180 domestic funds and 175 funds for foreign markets (as of June 30, 2016). It offers asset management and financial planning services to clients throughout the globe. Unlike other mutual fund companies, Vanguard is owned by the funds themselves. This helps its management to focus more on shareholder interests. Among the other advantages, it claims to offer low-cost, no-load funds.
We have selected five mutual funds that carry a Zacks Mutual Fund Rank #1 (Strong Buy). We expect these funds to outperform their peers in the future. Remember, the goal of the Zacks Mutual Fund Rank is to guide investors to identify potential winners and losers. Unlike most of the fund-rating systems, the Zacks Mutual Fund Rank is not just focused on past performance, but also on the likely future success of the fund.
These funds have encouraging year-to-date (YTD) and one-year annualized returns and minimum initial investment is within $5000. Also, each of these funds has a low expense ratio.
Vanguard Equity-Income Investor (VEIPX - Free Report) invests in mid cap and large cap equity securities with proven track records of paying out above average steady dividends. Companies with growth potential are also considered for investment.
VEIPX has an annual expense ratio of 0.26%, lower than the category average of 1.13%. The fund has YTD and one-year annualized returns of 0.7% and 15.5%, respectively.
Vanguard Capital Value Investor seeks growth of capital for the long run. VCVLX normally invests in common stocks of companies that are expected to be undervalued.
VCVLX has an annual expense ratio of 0.25%, lower than the category average of 1.13%. The fund has YTD and one-year annualized returns of 2% and 15.5%, respectively.
Vanguard Energy Investor (VGENX - Free Report) invests a major portion of its assets in equity securities of companies from the energy sector. VGENX normally invests in stocks of companies that are engaged in the production, marketing, transmission and research of energy.
VGENX has an annual expense ratio of 0.37%, lower than the category average of 1.52%. The fund has YTD and one-year annualized returns of 1.4% and 35.3%, respectively.
Vanguard Strategic Equity Investor (VSEQX - Free Report) invests a large portion of its assets in equity securities of both small- and mid-capitalization domestic companies. VSEQX selects securities that provide a balance between strong growth and reasonable valuations compared to its industry peers.
VSEQX has an annual expense ratio of 0.18%, lower than the category average of 1.13%. The fund has YTD and one-year annualized returns of 2.4% and 22.9%, respectively.
Vanguard Value Index Investor (VIVAX - Free Report) seeks long-term growth of capital and income from dividends. VIVAX holds all the stocks in the Standard and Poor's Value Index and attempts to match the performance of the index.
VIVAX has an annual expense ratio of 0.22%, lower than the category average of 1.13%. The fund has YTD and one-year annualized returns of 1.3% and 19.8%, respectively.
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5 Best Performing Vanguard Mutual Funds of 2016
Vanguard, the biggest fund family of the U.S. in terms of asset under management, performed favorably in 2016. As per spokesman John Woerth’s email, Vanguard attracted total investment of around $305 billion in 2016, beating its previous record level of $276.4 billion in the preceding year.
Additionally, strong recovery in markets following Donald Trump’s victory in the U.S. Presidential election also benefited Vanguard, which manages a large number of index and sector funds. Further, Fed’s decision to raise rates and major oil producing nations coming to a consensus to freeze crude production boosted the equity-based fund market.
What Boosted Vanguard Fund’s Performance?
The passively managed funds registered total inflows of around $428.6 billion in the first 11 months of 2016, in contrast to total outflows of $286 billion in active funds during the same period. Strong investments in passive funds had a positive impact on the market leader of passively managed funds, Vanguard.
Moreover, Vanguard has decided to reduce expense fees for 35 funds, which is believed to help investors interested in low cost funds. On this matter, CEO Bill McNabb said that Vanguard has “announced reductions across” its product offerings which include “mutual fund and ETF, index and active, stock and bond, domestic and international.”
Additionally, Vanguard Total Stock Market Index Investor (VTSMX - Free Report) , the largest fund by asset size, climbed 1.4% in the year-to-date frame (as of Jan 6). VTSMX also has a low expense ratio of only 0.16% making it a strong bet for investors.
Sectors Contributing to Vanguard’s Gains
Vanguard invests in a variety of sectors that are sensitive, cyclical and defensive. From the sensitive sectors, most investment is made in the technology sector. In the cyclical sectors, the fund family invests the maximum in the financial sector, which is expected to move up on the back of Trump’s financial regulations and a higher-rate environment.
Technology Select Sector SPDR (XLK) climbed 16.3% in the last one-year period. Also, the technology mutual fund posted a one-year positive return of 15.7%, according to Morningstar.
Additionally, Financial Select Sector SPDR (XLF) jumped 23.2% in the last one-year period and was one of the best gainers among the S&P 500 sectors. Per Morningstar, the financial mutual fund posted a one-year positive return of 22.4%.
Buy These 5 Strong Vanguard Mutual Funds
Vanguard is one of the world’s largest investment management company, founded by John C. Bogle in 1975. It manages more than $3.58 trillion in assets and offers nearly 180 domestic funds and 175 funds for foreign markets (as of June 30, 2016). It offers asset management and financial planning services to clients throughout the globe. Unlike other mutual fund companies, Vanguard is owned by the funds themselves. This helps its management to focus more on shareholder interests. Among the other advantages, it claims to offer low-cost, no-load funds.
We have selected five mutual funds that carry a Zacks Mutual Fund Rank #1 (Strong Buy). We expect these funds to outperform their peers in the future. Remember, the goal of the Zacks Mutual Fund Rank is to guide investors to identify potential winners and losers. Unlike most of the fund-rating systems, the Zacks Mutual Fund Rank is not just focused on past performance, but also on the likely future success of the fund.
These funds have encouraging year-to-date (YTD) and one-year annualized returns and minimum initial investment is within $5000. Also, each of these funds has a low expense ratio.
Vanguard Equity-Income Investor (VEIPX - Free Report) invests in mid cap and large cap equity securities with proven track records of paying out above average steady dividends. Companies with growth potential are also considered for investment.
VEIPX has an annual expense ratio of 0.26%, lower than the category average of 1.13%. The fund has YTD and one-year annualized returns of 0.7% and 15.5%, respectively.
Vanguard Capital Value Investor seeks growth of capital for the long run. VCVLX normally invests in common stocks of companies that are expected to be undervalued.
VCVLX has an annual expense ratio of 0.25%, lower than the category average of 1.13%. The fund has YTD and one-year annualized returns of 2% and 15.5%, respectively.
Vanguard Energy Investor (VGENX - Free Report) invests a major portion of its assets in equity securities of companies from the energy sector. VGENX normally invests in stocks of companies that are engaged in the production, marketing, transmission and research of energy.
VGENX has an annual expense ratio of 0.37%, lower than the category average of 1.52%. The fund has YTD and one-year annualized returns of 1.4% and 35.3%, respectively.
Vanguard Strategic Equity Investor (VSEQX - Free Report) invests a large portion of its assets in equity securities of both small- and mid-capitalization domestic companies. VSEQX selects securities that provide a balance between strong growth and reasonable valuations compared to its industry peers.
VSEQX has an annual expense ratio of 0.18%, lower than the category average of 1.13%. The fund has YTD and one-year annualized returns of 2.4% and 22.9%, respectively.
Vanguard Value Index Investor (VIVAX - Free Report) seeks long-term growth of capital and income from dividends. VIVAX holds all the stocks in the Standard and Poor's Value Index and attempts to match the performance of the index.
VIVAX has an annual expense ratio of 0.22%, lower than the category average of 1.13%. The fund has YTD and one-year annualized returns of 1.3% and 19.8%, respectively.
Want key mutual fund info delivered straight to your inbox?
Zacks’ free Fund Newsletter will brief you on top news and analysis, as well as top-performing mutual funds, each week. Get it free >>