Back to top

Image: Bigstock

Is Vanguard US Growth Investor (VWUSX) a Strong Mutual Fund Pick Right Now?

Read MoreHide Full Article

Large Cap Growth fund seekers should consider taking a look at Vanguard US Growth Investor (VWUSX - Free Report) . VWUSX possesses a Zacks Mutual Fund Rank of 1 (Strong Buy), which is based on nine forecasting factors like size, cost, and past performance.

Objective

VWUSX is part of the Large Cap Growth section, and this segment boasts an array of other possible options. Large Cap Growth mutual funds purchase stakes in numerous large U.S. companies that are expected to develop and grow at a faster rate than other large-cap stocks. Companies are usually considered to be large-cap if their market capitalization is over $10 billion.

History of Fund/Manager

Vanguard Group is responsible for VWUSX, and the company is based out of Malvern, PA. The Vanguard US Growth Investor made its debut in August of 1961 and VWUSX has managed to accumulate roughly $4.23 billion in assets, as of the most recently available information. A team of investment professionals is the fund's current manager.

Performance

Of course, investors look for strong performance in funds. This fund in particular has delivered a 5-year annualized total return of 12.67%, and it sits 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 15.53%, 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. VWUSX's standard deviation over the past three years is 13.13% compared to the category average of 11.06%. The standard deviation of the fund over the past 5 years is 13.08% compared to the category average of 10.83%. This makes the fund more volatile than its peers over the past half-decade.

Risk Factors

It's always important to be aware of the downsides to any future investment, so one should not discount the risks that come with this segment. VWUSX lost 47.21% in the most recent bear market and outperformed its peer group by 1.63%. This might suggest that the fund is a better choice than its peers during a bear market.

Investors should note that the fund has a 5-year beta of 1.07, so it is likely going to be more volatile than 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. VWUSX's 5-year performance has produced a positive alpha of 1.07, which means managers in this portfolio are skilled in picking 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 principally on equities that are traded in the United States.

As of the last filing date, the mutual fund has 98.89% of its assets in stocks, and these companies have an average market capitalization of $269.35 billion. The fund has the heaviest exposure to the following market sectors:

  1. Technology
  2. Retail Trade
  3. Finance
With turnover at about 33%, this fund is making 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, VWUSX is a no load fund. It has an expense ratio of 0.42% compared to the category average of 1.05%. Looking at the fund from a cost perspective, VWUSX is actually cheaper than its peers.

This fund requires a minimum initial investment of $3,000, and each subsequent investment should be at least $1.

Bottom Line

Overall, Vanguard US Growth Investor ( VWUSX ) has a high Zacks Mutual Fund rank, strong performance, average downside risk, and lower fees compared to its peers.

For additional information on this product, or to compare it to other mutual funds in the Large Cap Growth, make sure to go to www.zacks.com/funds/mutual-funds 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.


In-Depth Zacks Research for the Tickers Above


Normally $25 each - click below to receive one report FREE:


Vanguard US Growth Inv (VWUSX) - free report >>

Published in