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Is Vanguard LifeStrategy Income Fund (VASIX) a Strong Mutual Fund Pick Right Now?

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If investors are looking at the Allocation Balanced fund category, make sure to pass over Vanguard LifeStrategy Income Fund (VASIX - Free Report) . VASIX has a Zacks Mutual Fund Rank of 4 (Sell), which is based on various forecasting factors like size, cost, and past performance.

Objective

VASIX is one of many Zacks' Allocation Balanced mutual funds to pick from. Allocation Balanced funds seek to invest in a balance of asset types, like stocks, bonds, and cash, though including precious metals or commodities is not unusual; these funds are mostly categorized by their respective asset allocation. Investors utilize Allocation Balanced funds as a way to get a good start with diversified mutual funds, as well as for core holdings in a portfolio of funds.

History of Fund/Manager

VASIX is a part of the Vanguard Group family of funds, a company based out of Malvern, PA. Vanguard LifeStrategy Income Fund debuted in September of 1994. Since then, VASIX has accumulated assets of about $4.01 billion, according to the most recently available information. The fund is currently managed by a team of investment professionals.

Performance

Of course, investors look for strong performance in funds. This fund has delivered a 5-year annualized total return of 2.39%, and it sits in the bottom 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 8.36%, which places it in the bottom 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 VASIX over the past three years is 6.65% compared to the category average of 9.67%. Over the past 5 years, the standard deviation of the fund is 7% compared to the category average of 11%. This makes the fund less volatile than its peers over the past half-decade.

Risk Factors

The fund has a 5-year beta of 0.37, so investors should note that it is hypothetically less volatile than the market at large. Another factor to consider is alpha, as it reflects a portfolio's performance on a risk-adjusted basis relative to a benchmark-in this case, the S&P 500. VASIX's 5-year performance has produced a negative alpha of -5.23, which means managers in this portfolio find it difficult to pick securities that generate better-than-benchmark returns.

Expenses

As competition heats up in the mutual fund market, costs become increasingly important. Compared to its otherwise identical counterpart, a low-cost product will be an outperformer, all other things being equal. Thus, taking a closer look at cost-related metrics is vital for investors. In terms of fees, VASIX is a no load fund. It has an expense ratio of 0.11% compared to the category average of 0.71%. VASIX 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 consideration. Returns would be less if those were included.

Bottom Line

Overall, even with its comparatively weak performance, average downside risk, and lower fees, Vanguard LifeStrategy Income Fund ( VASIX ) has a low Zacks Mutual Fund rank, and therefore looks a somewhat weak choice for investors right now.

This could just be the start of your research on VASIX in the Allocation Balanced 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. And don't forget, Zacks has all of your needs covered on the equity side too! Make sure to check out Zacks.com for more information on our screening capabilities, Rank, and all our articles as well.


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