Vanguard, the biggest fund family of the U.S. in terms of asset under management, is expected to perform favorably this year. The fund family focuses on providing low cost funds to its investors. Also, it offers a variety of investment options from index funds to key actively managed funds.
Additionally, strong recovery in markets following Donald Trump’s election might benefit Vanguard, which manages a large number of index and sector funds. Further, the Fed’s decision to raise rates and the major oil producing nations coming to a consensus on freezing crude production is expected to boost the equity-based fund market in 2017.
What Boosted Vanguard Fund’s Performance?
As per spokesman John Woerth’s email, Vanguard attracted around $305 billion in investment last year, beating the previous record of more than $276 billion registered in 2015. Additionally, strong investments are expected in passive funds, which might have a positive impact on Vanguard, the market leader of passively managed funds.
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, spokeswoman 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, oil prices are seeing a rebound and are expected to perform favorably this year on the back of the crude production freeze decision. Although, there are a variety of energy-based funds, Vanguard Energy Fund (VGENX) is considered a wise investment option.
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 25.4% in the last one-year period. Also, the technology mutual fund posted a one-year positive return of 29.6%, according to Morningstar.
Additionally, Financial Select Sector SPDR (XLF) jumped 38% 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 37.2%.
Buy These 5 Strong Vanguard Mutual Funds
Vanguard is one of the world’s largest investment management companies, 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 Emerging Markets Stock Index Investor (VEIEX - Free Report) normally adopts an investment approach that tracks the overall performance of the benchmark index, FTSE Emerging Markets All Cap China A Inclusion Index.
VEIEX has an annual expense ratio of 0.32%, lower than the category average of 1.47%. The fund has YTD and one-year annualized returns of 5.8% and 32.4%, respectively.
Vanguard LifeStrategy Growth Investor (VASGX - Free Report) invests in different other Vanguard mutual funds with asset allocation of nearly 80% in equity securities and about 20% in debt securities.
VASGX has an annual expense ratio of 0.16%, lower than the category average of 0.89%. The fund has YTD and one-year annualized returns of 2.8% and 19.7%, respectively.
Vanguard Balanced Index Investor (VBINX - Free Report) tracks the performance of two benchmark indexes. At least 60% of its assets track the investment performance of the CRSP U.S. Total Market Index, while the remaining portion tracks the investment performance of the Barclays U.S. Aggregate Float Adjusted Index.
VBINX has an annual expense ratio of 0.22%, lower than the category average of 0.91%. The fund has YTD and one-year annualized returns of 1.6% and 16.1%, respectively.
Vanguard Dividend Appreciation Index Investor (VDAIX - Free Report) tracks the performance of NASDAQ US Dividend Achievers Select Index that measures the investment return of common stocks of companies that have a record of increasing dividends over time.
VDAIX has an annual expense ratio of 0.19%, lower than the category average of 1.05%. The fund has YTD and one-year annualized returns of 2.4% and 22.2%, respectively.
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 1.10%. The fund has YTD and one-year annualized returns of 1.4% and 25.4%, respectively.
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