Any investors hoping to find a Investment Grade Bond - Intermediate fund could think about starting with Vanguard Intermediate-Term Investment-Grade Admiral (VFIDX Quick QuoteVFIDX - Free Report) . VFIDX carries a Zacks Mutual Fund Rank of 1 (Strong Buy), which is based on various forecasting factors like size, cost, and past performance.

Objective

We classify VFIDX in the Investment Grade Bond - Intermediate category, an area rife with potential choices. Investment Grade Bond - Intermediate funds target the middle part of the curve, typically by investing in bonds that mature in more than three years but less than 15 years. At these maturity levels, fixed income instruments have medium duration risk--but they compensate investors with a respectable yield compared to shorter maturity options. Finally, a focus on investment grade ensures that these funds are safer, but yields will be lower than in the junk bond category.

History of Fund/Manager

VFIDX is a part of the Vanguard Group family of funds, a company based out of Malvern, PA. Vanguard Intermediate-Term Investment-Grade Admiral made its debut in February of 2001, and since then, VFIDX has accumulated about $36.28 billion in assets, per the most up-to-date date available. 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 has delivered a 5-year annualized total return of 1.07%, and it sits in the top third among its category peers. But if you are looking for a shorter time frame, it is also worth looking at its 3-year annualized total return of 7.93%, which places it in the top 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. Over the past three years, VFIDX's standard deviation comes in at 7.19%, compared to the category average of 9.35%. The standard deviation of the fund over the past 5 years is 7.32% compared to the category average of 10.18%. This makes the fund less volatile than its peers over the past half-decade.

Bond Duration

Modified duration is a measure of a given bond's interest rate sensitivity, so when judging how fixed income securities will respond in a shifting rate environment, it is an excellent figure to look at.

For investors who think interest rates will rise, this is an important factor to consider. VFIDX has a modified duration of 6.1, which suggests that the fund will decline 6.1% for every hundred-basis-point increase in interest rates.

Income

It is important to consider the fund's average coupon because income is often a big reason for purchasing a fixed income security. Average coupon is a look at the average payout by the fund in a given year. For example, this fund's average coupon of 4.7% means that a $10,000 investment should result in a yearly payout of $470.

While a higher coupon is good for when you want a strong level of current income, it could present a reinvestment risk if rates are lower in the future when compared to the initial purchase date of the bond. Income is only one part of the bond picture, investors also need to consider risk relative to broad benchmarks.

With a beta of 0.98, this fund is less volatile than a broad market index of fixed income securities. Taking this into account, VFIDX has a positive alpha of 2.1 , 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, VFIDX has 87.1% in medium quality bonds, with ratings of "A" to "BBB". The fund's junk bond component-bonds rated "BB" or below-is at 1.2%, giving VFIDX an average quality of A. This means that it focuses on high quality securities.

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, VFIDX is a no load fund. It has an expense ratio of 0.10% compared to the category average of 0.76%. From a cost perspective, VFIDX is actually cheaper than its peers.

Investors need to be aware that with this product, the minimum initial investment is $50,000; 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 Intermediate-Term Investment-Grade Admiral ( VFIDX ) has a high Zacks Mutual Fund rank, and in conjunction with its comparatively strong performance, average downside risk, and lower fees, Vanguard Intermediate-Term Investment-Grade Admiral ( VFIDX ) looks like a good potential choice for investors right now.

Want even more information about VFIDX? Then go over to Zacks.com and check out our mutual fund comparison tool, and all of the other great features that we have to help you with your mutual fund analysis for additional information. Zacks provides a full suite of tools to help you analyze your portfolio - both funds and stocks - in the most efficient way possible.