Any investors hoping to find a Sector - Energy fund could think about starting with Vanguard Energy Investor (VGENX - Free Report) . VGENX possesses a Zacks Mutual Fund Rank of 1 (Strong Buy), which is based on nine forecasting factors like size, cost, and past performance.
We classify VGENX in the Sector - Energy category, an area that is rife with possible choices. Throughout the massive global energy sector, Sector - Energy mutual funds hold a wide range of quickly changing and vitally important industries. While oil and gas comprise the bulk of the exposure, carbon-based fuels will be the biggest group of assets in these funds, though clean energy is starting to pick up steam.
History of Fund/Manager
VGENX finds itself in the Vanguard Group family, based out of Malvern, PA. Since Vanguard Energy Investor made its debut in May of 1984, VGENX has garnered more than $2.72 billion in assets. The fund is currently managed by a team of investment professionals.
Of course, investors look for strong performance in funds. This fund carries a 5-year annualized total return of 0.12%, 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 2.19%, 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. Compared to the category average of 15.34%, the standard deviation of VGENX over the past three years is 19.25%. The standard deviation of the fund over the past 5 years is 17.61% compared to the category average of 14.18%. This makes the fund more 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, VGENX lost 48.46% and outperformed its peer group by 6.93%. This means that the fund could possibly be a better choice than its peers during a down market environment.
Investors should note that the fund has a 5-year beta of 1.02, so it is likely going to be as volatile as 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. VGENX has generated a negative alpha over the past five years of -11, demonstrating that managers in this portfolio find it difficult to pick 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, VGENX is a no load fund. It has an expense ratio of 0.39% compared to the category average of 1.50%. So, VGENX is actually cheaper than its peers from a cost perspective.
Investors should also note that the minimum initial investment for the product is $3,000 and that each subsequent investment needs to be at $1.
Overall, Vanguard Energy Investor has a high Zacks Mutual Fund rank, and in conjunction with its comparatively strong performance, average downside risk, and lower fees, Vanguard Energy Investor looks like a good potential choice for investors right now.
For additional information on this product, or to compare it to other mutual funds in the Sector - Energy, make sure to go to www.zacks.com/funds/mutual-funds 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.