Are you on the hunt for a Target Date fund? You should think about starting with Vanguard Target Retirement 2055 Fund (
VFFVX Quick Quote VFFVX - Free Report) . While this fund is not tracked by the Zacks Mutual Fund Rank, we were able to examine other factors like performance, volatility, and cost. History of Fund/Manager
Vanguard Group is based in Malvern, PA, and is the manager of VFFVX. Vanguard Target Retirement 2055 Fund made its debut in August of 2010, and since then, VFFVX has accumulated about $7.37 billion in assets, per the most up-to-date date available. The fund's current manager, William A. Coleman, has been in charge of the fund since February of 2013.
Investors naturally seek funds with strong performance. This fund in particular has delivered a 5-year annualized total return of 5.09%, 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 6.74%, 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 7.24%, the standard deviation of VFFVX over the past three years is 9.59%. The standard deviation of the fund over the past 5 years is 9.63% compared to the category average of 7.5%. This makes the fund more volatile than its peers over the past half-decade.
Investors should always remember the downsides to a potential investment, and this segment carries some risks one should be aware of.
Investors should not forget about beta, an important way to measure a mutual fund's risk compared to the market as a whole. VFFVX has a 5-year beta of 0.85, which means it is likely to be less volatile than the market average. Alpha is an additional metric to take into consideration, since it represents a portfolio's performance on a risk-adjusted basis relative to a benchmark, which in this case, is the S&P 500. VFFVX has generated a negative alpha over the past five years of -2.08, demonstrating that managers in this portfolio find it difficult to pick securities that generate better-than-benchmark returns.
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, VFFVX is a no load fund. It has an expense ratio of 0.15% compared to the category average of 0.46%. From a cost perspective, VFFVX is actually cheaper than its peers.
Investors need to be aware that with this product, the minimum initial investment is $1,000; each subsequent investment needs to be at least $1.
For additional information on the Target Date 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 VFFVX too 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.