Having trouble finding a Government Bond - Short fund? Vanguard Short-Term Federal Investor (VSGBX Quick QuoteVSGBX - Free Report) is a potential starting point. VSGBX holds a Zacks Mutual Fund Rank of 2 (Buy), which is based on various forecasting factors like size, cost, and past performance.

Objective

The world of Government Bond - Short funds is an area filled with options, such as VSGBX. Government Bond - Short funds hold securities issued by the federal government of the United States of America. These are seen as extremely low risk securities from a default perspective, and are often regarded as risk-free assets. This category focuses on the short end of the curve, and that results in lower yields, but also less sensitivity to interest rate fluctuations, too.

History of Fund/Manager

Vanguard Group is based in Malvern, PA, and is the manager of VSGBX. The Vanguard Short-Term Federal Investor made its debut in December of 1987 and VSGBX has managed to accumulate roughly $384.23 million in assets, as of the most recently available information. The fund's current manager, Brian Quigley, has been in charge of the fund since January of 2015.

Performance

Of course, investors look for strong performance in funds. VSGBX has a 5-year annualized total return of 1.22% and it sits in the top third among its category peers. If you're interested in shorter time frames, do not dismiss looking at the fund's 3 -year annualized total return of 3.01%, which places it in the middle third during this time-frame.

It is important to note that the product's returns may not reflect all its expenses. Any fees not reflected would lower the returns. Total returns do not reflect the fund's [%] sale charge. If sales charges were included, total returns would have been lower.

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 VSGBX over the past three years is 2.75% compared to the category average of 8.25%. Looking at the past 5 years, the fund's standard deviation is 2.35% compared to the category average of 7.9%. This makes the fund less volatile than its peers over the past half-decade.

With a beta of 0.4, this fund is less volatile than a broad market index of fixed income securities. Taking this into account, VSGBX has a negative alpha of -0.35, which measures performance on a risk-adjusted basis.

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, VSGBX is a no load fund. It has an expense ratio of 0.20% compared to the category average of 0.75%. VSGBX is actually cheaper than its peers when you consider factors like cost.

While the minimum initial investment for the product is $3,000, investors should also note that each subsequent investment needs to be at least $1.

Fees charged by investment advisors have not been taken into considiration. Returns would be less if those were included.

Bottom Line

Overall, Vanguard Short-Term Federal Investor ( VSGBX ) has a high Zacks Mutual Fund rank, and in conjunction with its comparatively strong performance, better downside risk, and lower fees, this fund looks like a good potential choice for investors right now.

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