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Is Vanguard Financials Index Administrative (VFAIX) a Strong Mutual Fund Pick Right Now?
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If you've been stuck searching for Sector - Finance funds, consider Vanguard Financials Index Administrative (VFAIX - Free Report) as a possibility. VFAIX carries a Zacks Mutual Fund Rank of 1 (Strong Buy), which is based on nine forecasting factors like size, cost, and past performance.
Objective
VFAIX is one of many Sector - Finance funds to choose from. Sector - Finance mutual funds provide investors with a diversified and stabilized investment approach focused on the financial space, which is a notoriously large, complex, and heavily-regulated industry. These funds include everything from insurance companies and exchanges to banks and investment giants; interest rates can impact the players of this space as well.
History of Fund/Manager
Vanguard Group is based in Malvern, PA, and is the manager of VFAIX. Since Vanguard Financials Index Administrative made its debut in January of 2004, VFAIX has garnered more than $683.94 million in assets. The fund is currently managed by William A. Coleman who has been in charge of the fund since December of 2015.
Performance
Obviously, what investors are looking for in these funds is strong performance relative to their peers. VFAIX has a 5-year annualized total return of 13.14% and is in the top third among its category peers. Investors who prefer analyzing shorter time frames should look at its 3-year annualized total return of 13.58%, 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, VFAIX's standard deviation comes in at 14.93%, compared to the category average of 15.47%. The fund's standard deviation over the past 5 years is 13.08% compared to the category average of 14.24%. This makes the fund less volatile than its peers over the past half-decade.
Risk Factors
Investors cannot discount the risks to this segment though, as it is always important to remember the downside for any potential investment. In VFAIX's case, the fund lost 71.44% in the most recent bear market and outperformed its peer group by 10.82%. These results could imply that the fund is a better choice than its peers during a sliding market environment.
Even still, the fund has a 5-year beta of 1.08, so investors should note that it is hypothetically more volatile than the market at large. 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. Over the past 5 years, the fund has a negative alpha of -0.55. This means that managers in this portfolio find it difficult to pick securities that generate better-than-benchmark returns.
Holdings
Exploring 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 largely on equities that are traded in the United States.
This fund is currently holding about 75.94% stock in stocks, and these companies have an average market capitalization of $91.78 billion. Turnover is about 4%, so those in charge of the fund make fewer trades than comparable funds.
Expenses
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, VFAIX is a no load fund. It has an expense ratio of 0.10% compared to the category average of 1.43%. From a cost perspective, VFAIX is actually cheaper than its peers.
Investors need to be aware that with this product, the minimum initial investment is $100,000; each subsequent investment needs to be at least $1.
Bottom Line
Overall, Vanguard Financials Index 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.
For additional information on this product, or to compare it to other mutual funds in the Sector - Finance, make sure to go to www.zacks.com/funds/mutual-funds for additional information. If you are more of a stock investor, make sure to also check out our Zacks Rank, and our full suite of tools we have available for novice and professional investors alike.
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Is Vanguard Financials Index Administrative (VFAIX) a Strong Mutual Fund Pick Right Now?
If you've been stuck searching for Sector - Finance funds, consider Vanguard Financials Index Administrative (VFAIX - Free Report) as a possibility. VFAIX carries a Zacks Mutual Fund Rank of 1 (Strong Buy), which is based on nine forecasting factors like size, cost, and past performance.
Objective
VFAIX is one of many Sector - Finance funds to choose from. Sector - Finance mutual funds provide investors with a diversified and stabilized investment approach focused on the financial space, which is a notoriously large, complex, and heavily-regulated industry. These funds include everything from insurance companies and exchanges to banks and investment giants; interest rates can impact the players of this space as well.
History of Fund/Manager
Vanguard Group is based in Malvern, PA, and is the manager of VFAIX. Since Vanguard Financials Index Administrative made its debut in January of 2004, VFAIX has garnered more than $683.94 million in assets. The fund is currently managed by William A. Coleman who has been in charge of the fund since December of 2015.
Performance
Obviously, what investors are looking for in these funds is strong performance relative to their peers. VFAIX has a 5-year annualized total return of 13.14% and is in the top third among its category peers. Investors who prefer analyzing shorter time frames should look at its 3-year annualized total return of 13.58%, 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, VFAIX's standard deviation comes in at 14.93%, compared to the category average of 15.47%. The fund's standard deviation over the past 5 years is 13.08% compared to the category average of 14.24%. This makes the fund less volatile than its peers over the past half-decade.
Risk Factors
Investors cannot discount the risks to this segment though, as it is always important to remember the downside for any potential investment. In VFAIX's case, the fund lost 71.44% in the most recent bear market and outperformed its peer group by 10.82%. These results could imply that the fund is a better choice than its peers during a sliding market environment.
Even still, the fund has a 5-year beta of 1.08, so investors should note that it is hypothetically more volatile than the market at large. 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. Over the past 5 years, the fund has a negative alpha of -0.55. This means that managers in this portfolio find it difficult to pick securities that generate better-than-benchmark returns.
Holdings
Exploring 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 largely on equities that are traded in the United States.
This fund is currently holding about 75.94% stock in stocks, and these companies have an average market capitalization of $91.78 billion. Turnover is about 4%, so those in charge of the fund make fewer trades than comparable funds.
Expenses
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, VFAIX is a no load fund. It has an expense ratio of 0.10% compared to the category average of 1.43%. From a cost perspective, VFAIX is actually cheaper than its peers.
Investors need to be aware that with this product, the minimum initial investment is $100,000; each subsequent investment needs to be at least $1.
Bottom Line
Overall, Vanguard Financials Index 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.
For additional information on this product, or to compare it to other mutual funds in the Sector - Finance, make sure to go to www.zacks.com/funds/mutual-funds for additional information. If you are more of a stock investor, make sure to also check out our Zacks Rank, and our full suite of tools we have available for novice and professional investors alike.