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Is Vanguard US Growth Administrative (VWUAX) a Strong Mutual Fund Pick Right Now?

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If investors are looking at the Large Cap Growth fund category, Vanguard US Growth Administrative (VWUAX - Free Report) could be a potential option. VWUAX carries a Zacks Mutual Fund Rank of 2 (Buy), which is based on nine forecasting factors like size, cost, and past performance.

Objective

VWUAX is classified in the Large Cap Growth segment by Zacks, an area full of possibilities. Companies are usually considered to be large-cap if their stock market valuation is more than $10 billion. Large Cap Growth mutual funds invest in many large U.S. firms that are projected to grow at a faster rate than their large-cap peers.

History of Fund/Manager

Vanguard Group is based in Malvern, PA, and is the manager of VWUAX. The Vanguard US Growth Administrative made its debut in August of 2001 and VWUAX has managed to accumulate roughly $4.92 billion in assets, as of the most recently available information. The fund's current manager is a team of investment professionals.

Performance

Of course, investors look for strong performance in funds. This fund carries a 5-year annualized total return of 15.75%, 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 12.53%, 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. The standard deviation of VWUAX over the past three years is 11.46% compared to the category average of 10.29%. The standard deviation of the fund over the past 5 years is 11.15% compared to the category average of 10%. This makes the fund more volatile than its peers over the past half-decade.

Risk Factors

One cannot ignore the volatility of this segment, however, as it is always important for investors to remember the downside to any potential investment. In VWUAX's case, the fund lost 47.12% in the most recent bear market and outperformed its peer group by 1.9%. 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 1.01, so investors should note that it is hypothetically 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. VWUAX's 5-year performance has produced a positive alpha of 2.52, which means managers in this portfolio are skilled in picking securities that generate better-than-benchmark returns.

Holdings

Investigating the equity holdings of a mutual fund is also a valuable exercise. This can show us how the manager is applying their stated methodology, as well as if there are any inherent biases in their approach. For this particular fund, the focus is mostly on equities that are traded in the United States.

Currently, this mutual fund is holding 98.74% stock in stocks, which have an average market capitalization of $223.43 billion. The fund has the heaviest exposure to the following market sectors:

  1. Technology
  2. Finance

This fund's turnover is about 27%, so the fund managers are making fewer trades than comparable funds.

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, VWUAX is a no load fund. It has an expense ratio of 0.30% compared to the category average of 1.11%. Looking at the fund from a cost perspective, VWUAX is actually cheaper than its peers.

This fund requires a minimum initial investment of $50,000, and each subsequent investment should be at least $1.

Bottom Line

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

Want even more information about VWUAX? Then go over to Zacks.com and check out our mutual fund comparison tool, and all of the other great features that we have to help you with your mutual fund analysis 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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