Any investors hoping to find an Allocation Balanced fund could think about starting with Vanguard Tax-Managed Balanced Fund (VTMFX - Free Report) . VTMFX has a Zacks Mutual Fund Rank of 3 (Hold), which is based on nine forecasting factors like size, cost, and past performance.
VTMFX 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
VTMFX is a part of the Vanguard Group family of funds, a company based out of Malvern, PA. Vanguard Tax-Managed Balanced Fund made its debut in September of 1994, and since then, VTMFX has accumulated about $4.02 billion in assets, per the most up-to-date date available. The fund is currently managed by a team of investment professionals.
Of course, investors look for strong performance in funds. This fund has delivered a 5-year annualized total return of 8.19%, and is 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 6.3%, 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, VTMFX's standard deviation comes in at 4.74%, compared to the category average of 7.04%. The fund's standard deviation over the past 5 years is 4.82% compared to the category average of 6.94%. This makes the fund less volatile than its peers over the past half-decade.
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. In the most recent bear market, VTMFX lost 25.22% and outperformed its peer group by 10.98%. This might suggest that the fund is a better choice than its peers during a bear market.
Even still, the fund has a 5-year beta of 0.46, so investors should note that it is hypothetically less volatile than the market at large. Because alpha represents a portfolio's performance on a risk-adjusted basis relative to a benchmark, which is the S&P 500 in this case, one should pay attention to this metric as well. Over the past 5 years, the fund has a positive alpha of 1.24. This means that managers in this portfolio are skilled in picking securities that generate better-than-benchmark returns.
Costs are increasingly important for mutual fund investing, and particularly as competition heats up in this market. And all things being equal, a lower cost product will outperform its otherwise identical counterpart, so taking a closer look at these metrics is key for investors. In terms of fees, VTMFX is a no load fund. It has an expense ratio of 0.09% compared to the category average of 0.90%. Looking at the fund from a cost perspective, VTMFX is actually cheaper than its peers.
This fund requires a minimum initial investment of $10,000, and each subsequent investment should be at least $1.
Overall, Vanguard Tax-Managed Balanced Fund has a neutral Zacks Mutual Fund rank, and in conjunction with its comparatively strong performance, average downside risk, and lower fees, Vanguard Tax-Managed Balanced Fund looks like a somewhat average choice for investors right now.
Your research on the Allocation Balanced 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.