If you're looking for a Investment Grade Bond - Short fund category, then a potential option is Vanguard Short-Term Investment Grade Fund Investor (VFSTX Quick QuoteVFSTX - Free Report) . VFSTX bears a Zacks Mutual Fund Rank of 3 (Hold), which is based on various forecasting factors like size, cost, and past performance.

Objective

VFSTX is classified in the Investment Grade Bond - Short segment by Zacks, an area full of investment potential. By investing in bonds that mature in less than two years, Investment Grade Bond - Short funds are focused on the short end of the curve. Fixed income instruments at this maturity level tend to have low duration risk, but they also pay out small yields compared to their longer-dated peers. Furthermore, these funds' focus on investment grade make them safer, but yields will be lower than in the junk bond category.

History of Fund/Manager

VFSTX is a part of the Vanguard Group family of funds, a company based out of Malvern, PA. Vanguard Short-Term Investment Grade Fund Investor debuted in October of 1982. Since then, VFSTX has accumulated assets of about $3.02 billion, according to the most recently available information. The fund is currently managed by Daniel Shaykevich who has been in charge of the fund since April of 2018.

Performance

Investors naturally seek funds with strong performance. This fund carries a 5-year annualized total return of 1.87%, 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 4.4%, 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 VFSTX over the past three years is 3.28% compared to the category average of 10.15%. Looking at the past 5 years, the fund's standard deviation is 3% compared to the category average of 9.75%. This makes the fund less volatile than its peers over the past half-decade.

Bond Duration

Modified duration is a measure of a specific bond's interest rate sensitivity, and is an excellent way to judge how fixed income securities will respond to a shifting rate environment.

For those that believe interest rates will rise, this is an important factor to consider. VFSTX has a modified duration of 2.7, which suggests that the fund will decline 2.7% for every hundred-basis-point increase in interest rates.

Income

Income is often a big reason for purchasing a fixed income security, so it is important to consider the fund's average coupon. This metric takes a look at the average payout by the fund in a given year. For example, this fund's average coupon of 4.4% means that a $10,000 investment should result in a yearly payout of $440.

A higher coupon is good for those seeking a strong level of current income, but it could also pose a reinvestment risk if rates are lower in the future when compared to the initial purchase date of the bond. Investors also need to consider risk relative to broad benchmarks, as income is only one part of the bond picture.

This fund has a beta of 0.44, meaning that it is less volatile than a broad market index of fixed income securities. Taking this into account, VFSTX has a positive alpha of 0.74, which measures performance on a risk-adjusted basis.

Ratings

Investors should also consider a bond's rating, which is a grade "AAA" to "D" given to a bond that indicates its credit quality. With this letter scale in mind, VFSTX has 85.2% in medium quality bonds, with ratings of "A" to "BBB". The fund's junk bond component-bonds rated "BB" or below-is at 1.5%, giving VFSTX an average quality of A. This means that it focuses on high quality securities.

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, VFSTX is a no load fund. It has an expense ratio of 0.20% compared to the category average of 0.82%. From a cost perspective, VFSTX is actually cheaper than its peers.

Investors need to be aware that with this product, the minimum initial investment is $3,000; each subsequent investment needs to be at least $1.

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

Bottom Line

Overall, Vanguard Short-Term Investment Grade Fund Investor ( VFSTX ) has a neutral Zacks Mutual Fund rank, and in conjunction with its comparatively similar performance, better downside risk, and lower fees, this fund looks like a somewhat average choice for investors right now.

This could just be the start of your research on VFSTX in the Investment Grade Bond - Short 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. Want to learn even more? We have a full suite of tools on stocks that you can use to find the best choices for your portfolio too, no matter what kind of investor you are.