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Is Vanguard Selected Value Fund (VASVX) a Strong Mutual Fund Pick Right Now?

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There are plenty of choices in the Mid Cap Value category, but where should you start your research? Well, one fund that might be worth investigating is Vanguard Selected Value Fund (VASVX - Free Report) . VASVX possesses a Zacks Mutual Fund Rank of 1 (Strong Buy), which is based on nine forecasting factors like size, cost, and past performance.

Objective

VASVX is one of many Mid Cap Value mutual funds to choose from. Mid Cap Value funds usually invest in companies with a stock market valuation between $2 billion and $10 billion; these medium-sized firms possess strong value and income opportunities for investors.

History of Fund/Manager

Vanguard Group is based in Malvern, PA, and is the manager of VASVX. Vanguard Selected Value Fund debuted in February of 1996. Since then, VASVX has accumulated assets of about $11.25 billion, according to the most recently available information. A team of investment professionals is the fund's current manager.

Performance

Obviously, what investors are looking for in these funds is strong performance relative to their peers. VASVX has a 5-year annualized total return of 14.61% 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 12.59%, which places it in the top third during this time-frame.

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, VASVX's standard deviation comes in at 11.63%, compared to the category average of 11.46%. The fund's standard deviation over the past 5 years is 11% compared to the category average of 11.09%. This makes the fund less volatile than its peers over the past half-decade.

Risk Factors

It's always important to be aware of the downsides to any future investment, so one should not discount the risks that come with this segment. VASVX lost 48.06% in the most recent bear market and outperformed its peer group by 3.52%. This could mean that the fund is a better choice than comparable funds during a bear market.

Investors should not forget about beta, an important way to measure a mutual fund's risk compared to the market as a whole. VASVX has a 5-year beta of 1.01, which means it is likely to be as volatile as the market average. 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. The fund has produced a negative alpha over the past 5 years of -1.16, which shows that 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, VASVX is a no load fund. It has an expense ratio of 0.38% compared to the category average of 1.12%. So, VASVX is actually cheaper than its peers from a cost perspective.

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.

Bottom Line

Overall, Vanguard Selected Value Fund has a high Zacks Mutual Fund rank, and in conjunction with its comparatively strong performance, average downside risk, and lower fees, Vanguard Selected Value Fund looks like a good potential choice for investors right now.

For additional information on the Mid Cap Value area of the mutual fund world, make sure to check out www.zacks.com/funds/mutual-funds. There, you can see more about the ranking process, and dive even deeper into VASVX too for additional information. If you want to check out our stock reports as well, make sure to go to Zacks.com to see all of the great tools we have to offer, including our time-tested Zacks Rank.


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