Any investors hoping to find a Investment Grade Bond - Short fund could think about starting with Vanguard Short-Term Investment-Grade Admiral (VFSUX Quick QuoteVFSUX - Free Report) . VFSUX carries a Zacks Mutual Fund Rank of 3 (Hold), which is based on various forecasting factors like size, cost, and past performance.

Objective

VFSUX is part of the Investment Grade Bond - Short category, a segment that boasts an array of other possible selections. Investment Grade Bond - Short funds target the short end of the curve by focusing on bonds that mature in less than two years. Fixed income instruments with this maturity level typically have low duration risk and pay out small yields, at least in comparison to their longer-dated peers. Also, these funds tend to be safer because of their focus on investment grade, but yields will be lower than could be found in the junk bond category.

History of Fund/Manager

Vanguard Group is based in Malvern, PA, and is the manager of VFSUX. The Vanguard Short-Term Investment-Grade Admiral made its debut in February of 2001 and VFSUX has managed to accumulate roughly $38.19 billion in assets, as of the most recently available information. The fund's current manager, Daniel Shaykevich, has been in charge of the fund since April of 2018.

Performance

Of course, investors look for strong performance in funds. This fund has delivered a 5-year annualized total return of 2.29%, 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 6.44%, 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. Compared to the category average of 8.68%, the standard deviation of VFSUX over the past three years is 2.84%. Looking at the past 5 years, the fund's standard deviation is 3.02% compared to the category average of 9.61%. 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, and is a metric that's a good way to judge how fixed income securities will respond in a shifting rate environment.

For investors who think interest rates will rise, this is an important factor to consider. VFSUX 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

We must remember to consider the fund's average coupon, as income is traditionally a big reason for purchasing a fixed income security. A fund's average coupon is simply its average payout 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.

If you are looking for a strong level of current income, a higher coupon is a good choice, though it could pose a reinvestment risk; these risks can occur if rates are lower in the future when compared to the initial purchase date of the bond. Since income is just one part of the bond picture, investors need to consider risk relative to broad benchmarks.

With a beta of 0.43, this fund is less volatile than a broad market index of fixed income securities. Taking this into account, VFSUX has a positive alpha of 0.66 , 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, VFSUX 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 VFSUX 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, VFSUX is a no load fund. It has an expense ratio of 0.09% compared to the category average of 0.82%. Looking at the fund from a cost perspective, VFSUX 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 Short-Term Investment-Grade Admiral ( VFSUX ) has a neutral Zacks Mutual Fund rank, and in conjunction with its comparatively similar performance, better downside risk, and lower fees, Vanguard Short-Term Investment-Grade Admiral ( VFSUX ) looks like a somewhat average choice for investors right now.

Your research on the Investment Grade Bond - Short segment doesn't have to stop here. You can check out all the great mutual fund tools we have to offer by going to www.zacks.com/funds/mutual-funds to see the additional features we offer as well for additional information. For analysis of the rest of your portfolio, make sure to visit Zacks.com for our full suite of tools which will help you investigate all of your stocks and funds in one place.