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If you've been stuck searching for Investment Grade Bond - Intermediate funds, consider Vanguard Intermediate-Term Investment-Grade Admiral (VFIDX - Free Report) as a possibility. VFIDX holds a Zacks Mutual Fund Rank of 2 (Buy), which is based on nine forecasting factors like size, cost, and past performance.
Objective
We classify VFIDX in the Investment Grade Bond - Intermediate category, an area rife with potential choices. Investment Grade Bond - Intermediate funds target the middle part of the curve, typically by investing in bonds that mature in more than three years but less than 15 years. At these maturity levels, fixed income instruments have medium duration risk--but they compensate investors with a respectable yield compared to shorter maturity options. Finally, a focus on investment grade ensures that these funds are safer, but yields will be lower than in the junk bond category.
History of Fund/Manager
VFIDX is a part of the Vanguard Group family of funds, a company based out of Malvern, PA. Vanguard Intermediate-Term Investment-Grade Admiral debuted in February of 2001. Since then, VFIDX has accumulated assets of about $27.10 billion, according to the most recently available information. The fund's current manager, Samuel C. Martinez, has been in charge of the fund since April of 2018.
Performance
Investors naturally seek funds with strong performance. This fund has delivered a 5-year annualized total return of 2.7%, 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 1.78%, which places it in the middle 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 5.84%, the standard deviation of VFIDX over the past three years is 2.98%. Looking at the past 5 years, the fund's standard deviation is 3.03% compared to the category average of 5.74%. This makes the fund less volatile than its peers over the past half-decade.
Bond Duration
Modified duration is a measure of a given bond's interest rate sensitivity, and is a metric that's a good way to judge how fixed income securities will respond in a shifting rate environment.
For investors who think interest rates will rise, this is an important factor to consider. VFIDX has a modified duration of 5.6, which suggests that the fund will decline 5.6% for every hundred-basis-point increase in interest rates.
Income
Since income is, of course, a big reason for purchasing a fixed income security, it is always important to consider the fund's average coupon. This metric calculates the fund's average payout in a given year. For example, this fund's average coupon of 2.9% means that a $10,000 investment should result in a yearly payout of $290.
If you are looking for a strong level of current income, a higher coupon is a good choice, though it could pose a reinvestment risk; these risks can occur if rates are lower in the future when compared to the initial purchase date of the bond.
Since income is just one part of the bond picture, investors need to consider risk relative to broad benchmarks. With a beta of 1.05, this fund is more volatile than a broad market index of fixed income securities. Taking this into account, VFIDX has a positive alpha of 0.43, which measures performance on a risk-adjusted basis.
Ratings
Investors should also consider a bond's rating, which is a grade ( 'AAA' to 'D' ) given to a bond that indicates its credit quality. With this letter scale in mind, VFIDX has 36.8% in high quality bonds rated at least 'AA' or higher, while 60.3% are of medium quality, with ratings of 'A' to 'BBB'. The fund has an average quality of A, and focuses on high quality securities.
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, VFIDX is a no load fund. It has an expense ratio of 0.10% compared to the category average of 0.84%. Looking at the fund from a cost perspective, VFIDX is actually cheaper than its peers.
While the minimum initial investment for the product is $50,000, investors should also note that each subsequent investment needs to be at least $1.
Bottom Line
Overall, Vanguard Intermediate-Term Investment-Grade Admiral ( VFIDX ) has a high Zacks Mutual Fund rank, and in conjunction with its comparatively similar performance, average downside risk, and lower fees, this fund looks like a good potential choice for investors right now.
Want even more information about VFIDX? 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. 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.
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Is VFIDX a Strong Bond Fund Right Now?
If you've been stuck searching for Investment Grade Bond - Intermediate funds, consider Vanguard Intermediate-Term Investment-Grade Admiral (VFIDX - Free Report) as a possibility. VFIDX holds a Zacks Mutual Fund Rank of 2 (Buy), which is based on nine forecasting factors like size, cost, and past performance.
Objective
We classify VFIDX in the Investment Grade Bond - Intermediate category, an area rife with potential choices. Investment Grade Bond - Intermediate funds target the middle part of the curve, typically by investing in bonds that mature in more than three years but less than 15 years. At these maturity levels, fixed income instruments have medium duration risk--but they compensate investors with a respectable yield compared to shorter maturity options. Finally, a focus on investment grade ensures that these funds are safer, but yields will be lower than in the junk bond category.
History of Fund/Manager
VFIDX is a part of the Vanguard Group family of funds, a company based out of Malvern, PA. Vanguard Intermediate-Term Investment-Grade Admiral debuted in February of 2001. Since then, VFIDX has accumulated assets of about $27.10 billion, according to the most recently available information. The fund's current manager, Samuel C. Martinez, has been in charge of the fund since April of 2018.
Performance
Investors naturally seek funds with strong performance. This fund has delivered a 5-year annualized total return of 2.7%, 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 1.78%, which places it in the middle 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 5.84%, the standard deviation of VFIDX over the past three years is 2.98%. Looking at the past 5 years, the fund's standard deviation is 3.03% compared to the category average of 5.74%. This makes the fund less volatile than its peers over the past half-decade.
Bond Duration
Modified duration is a measure of a given bond's interest rate sensitivity, and is a metric that's a good way to judge how fixed income securities will respond in a shifting rate environment.
For investors who think interest rates will rise, this is an important factor to consider. VFIDX has a modified duration of 5.6, which suggests that the fund will decline 5.6% for every hundred-basis-point increase in interest rates.
Income
Since income is, of course, a big reason for purchasing a fixed income security, it is always important to consider the fund's average coupon. This metric calculates the fund's average payout in a given year. For example, this fund's average coupon of 2.9% means that a $10,000 investment should result in a yearly payout of $290.
If you are looking for a strong level of current income, a higher coupon is a good choice, though it could pose a reinvestment risk; these risks can occur if rates are lower in the future when compared to the initial purchase date of the bond.
Since income is just one part of the bond picture, investors need to consider risk relative to broad benchmarks. With a beta of 1.05, this fund is more volatile than a broad market index of fixed income securities. Taking this into account, VFIDX has a positive alpha of 0.43, which measures performance on a risk-adjusted basis.
Ratings
Investors should also consider a bond's rating, which is a grade ( 'AAA' to 'D' ) given to a bond that indicates its credit quality. With this letter scale in mind, VFIDX has 36.8% in high quality bonds rated at least 'AA' or higher, while 60.3% are of medium quality, with ratings of 'A' to 'BBB'. The fund has an average quality of A, and focuses on high quality securities.
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, VFIDX is a no load fund. It has an expense ratio of 0.10% compared to the category average of 0.84%. Looking at the fund from a cost perspective, VFIDX is actually cheaper than its peers.
While the minimum initial investment for the product is $50,000, investors should also note that each subsequent investment needs to be at least $1.
Bottom Line
Overall, Vanguard Intermediate-Term Investment-Grade Admiral ( VFIDX ) has a high Zacks Mutual Fund rank, and in conjunction with its comparatively similar performance, average downside risk, and lower fees, this fund looks like a good potential choice for investors right now.
Want even more information about VFIDX? 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. 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.