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Looking for a Diversified Bonds fund? You may want to consider Vanguard Total Bond Market Index Institutional (VBTIX - Free Report) as a possible option. The fund does not have a Zacks Mutual Fund Rank, though we have been able to explore other metrics like performance, volatility, and cost.
Objective
VBTIX is one of many Diversified Bonds funds to choose from.Diversified Bonds funds give investors exposure to a variety of fixed income types that span across different issuers, maturities, and credit levels. Usually, these funds will have a good amount of exposure to government debt, in addition to modest holdings in the corporate bond market.
History of Fund/Manager
Vanguard Group is based in Malvern, PA, and is the manager of VBTIX. Since Vanguard Total Bond Market Index Institutional made its debut in September of 1995, VBTIX has garnered more than $44.33 billion in assets. The fund is currently managed by Joshua Barrickman who has been in charge of the fund since February of 2013.
Performance
Of course, investors look for strong performance in funds. This fund carries a 5-year annualized total return of -0.35%, and is in the middle 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 4.05%, which places it in the middle 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. The standard deviation of VBTIX over the past three years is 5.85% compared to the category average of 10.03%. Looking at the past 5 years, the fund's standard deviation is 6.37% compared to the category average of 11.56%. This makes the fund less volatile than its peers over the past half-decade.
Bond Duration
Modified duration is a measure of a specific bond's interest rate sensitivity, and is an excellent way to judge how fixed income securities will respond to a shifting rate environment.
For investors who think interest rates will rise, this is an important factor to consider. VBTIX has a modified duration of 5.78, which suggests that the fund will decline 5.78% 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 3.81% means that a $10,000 investment should result in a yearly payout of $381.
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. Because income is only one part of the bond picture, investors should also consider risk relative to broad benchmarks.
This fund has a beta of 0.98, meaning that it is less volatile than a broad market index of fixed income securities. Taking this into account, VBTIX has a negative alpha of -0.12, which measures performance on a risk-adjusted basis.
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, VBTIX is a no load fund. It has an expense ratio of 0.03% compared to the category average of 0.84%. Looking at the fund from a cost perspective, VBTIX is actually cheaper than its peers.
While the minimum initial investment for the product is $5.00 million, investors should also note that 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
For additional information on the Diversified Bonds 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 VBTIX too for additional information. Want to learn even more? We have a full suite of tools on stocks that you can use to find the best choices for your portfolio too, no matter what kind of investor you are.
View the Zacks #1 Rank List
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Is VBTIX a Strong Bond Fund Right Now?
Looking for a Diversified Bonds fund? You may want to consider Vanguard Total Bond Market Index Institutional (VBTIX - Free Report) as a possible option. The fund does not have a Zacks Mutual Fund Rank, though we have been able to explore other metrics like performance, volatility, and cost.
Objective
VBTIX is one of many Diversified Bonds funds to choose from.Diversified Bonds funds give investors exposure to a variety of fixed income types that span across different issuers, maturities, and credit levels. Usually, these funds will have a good amount of exposure to government debt, in addition to modest holdings in the corporate bond market.
History of Fund/Manager
Vanguard Group is based in Malvern, PA, and is the manager of VBTIX. Since Vanguard Total Bond Market Index Institutional made its debut in September of 1995, VBTIX has garnered more than $44.33 billion in assets. The fund is currently managed by Joshua Barrickman who has been in charge of the fund since February of 2013.
Performance
Of course, investors look for strong performance in funds. This fund carries a 5-year annualized total return of -0.35%, and is in the middle 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 4.05%, which places it in the middle 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. The standard deviation of VBTIX over the past three years is 5.85% compared to the category average of 10.03%. Looking at the past 5 years, the fund's standard deviation is 6.37% compared to the category average of 11.56%. This makes the fund less volatile than its peers over the past half-decade.
Bond Duration
Modified duration is a measure of a specific bond's interest rate sensitivity, and is an excellent way to judge how fixed income securities will respond to a shifting rate environment.
For investors who think interest rates will rise, this is an important factor to consider. VBTIX has a modified duration of 5.78, which suggests that the fund will decline 5.78% 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 3.81% means that a $10,000 investment should result in a yearly payout of $381.
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. Because income is only one part of the bond picture, investors should also consider risk relative to broad benchmarks.
This fund has a beta of 0.98, meaning that it is less volatile than a broad market index of fixed income securities. Taking this into account, VBTIX has a negative alpha of -0.12, which measures performance on a risk-adjusted basis.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, VBTIX is a no load fund. It has an expense ratio of 0.03% compared to the category average of 0.84%. Looking at the fund from a cost perspective, VBTIX is actually cheaper than its peers.
While the minimum initial investment for the product is $5.00 million, investors should also note that 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
For additional information on the Diversified Bonds 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 VBTIX too for additional information. Want to learn even more? We have a full suite of tools on stocks that you can use to find the best choices for your portfolio too, no matter what kind of investor you are.