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If you have been looking for High Yield - Bonds funds, a place to start could be Vanguard High-Yield Corporate Investor (VWEHX - Free Report) . VWEHX has a Zacks Mutual Fund Rank of 1 (Strong Buy), which is based on nine forecasting factors like size, cost, and past performance.
Objective
VWEHX is part of the High Yield - Bonds section, which is a segment that boasts many possible options. Often referred to as " junk " bonds, High Yield - Bonds funds sit below investment grade, meaning they are at a high default risk compared to their investment grade peers. However, one advantage to junk bonds is that they generally pay out higher yields while posing similar interest rate risks to their investment grade counterparts.
History of Fund/Manager
Vanguard Group is based in Malvern, PA, and is the manager of VWEHX. Vanguard High-Yield Corporate Investor made its debut in December of 1978, and since then, VWEHX has accumulated about $3.56 billion in assets, per the most up-to-date date available. Michael L. Hong is the fund's current manager and has held that role since February of 2008.
Performance
Investors naturally seek funds with strong performance. This fund carries a 5-year annualized total return of 4.41%, and it sits 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 6.95%, 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 -20.35%, the standard deviation of VWEHX over the past three years is 4.54%. Over the past 5 years, the standard deviation of the fund is 4.65% compared to the category average of -25.69%. This makes the fund more volatile than its peers over the past half-decade.
Bond Duration
Modified duration is a measure of a given bond's interest rate sensitivity, so when judging how fixed income securities will respond in a shifting rate environment, it is an excellent figure to look at.
For investors who think interest rates will rise, this is an important factor to consider. VWEHX has a modified duration of 4.5, which suggests that the fund will decline 4.5% for every hundred-basis-point increase in interest rates.
Income
We must remember to consider the fund's average coupon, as income is traditionally a big reason for purchasing a fixed income security. A fund's average coupon is simply its average payout in a given year. For example, this fund's average coupon of 5.7% means that a $10,000 investment should result in a yearly payout of $570.
For those seeking a strong level of current income, a higher coupon is typically good news. However, it could pose a reinvestment risk 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 0.41, this fund is less volatile than a broad market index of fixed income securities. Taking this into account, VWEHX has a positive alpha of 3.01, which measures performance on a risk-adjusted basis.
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, VWEHX is a no load fund. It has an expense ratio of 0.23% compared to the category average of 0.35%. VWEHX is actually cheaper than its peers when you consider factors like cost.
This fund requires a minimum initial investment of $3,000, and each subsequent investment should be at least $1.
Bottom Line
Overall, Vanguard High-Yield Corporate Investor ( VWEHX ) has a high Zacks Mutual Fund rank, strong performance, worse downside risk, and lower fees compared to its peers.
Your research on the High Yield - Bonds segment doesn't have to stop here. You can check out all the great mutual fund tools we have to offer by going to www.zacks.com/funds/mutual-funds to see the additional features we offer as well for additional information. And don't forget, Zacks has all of your needs covered on the equity side too! Make sure to check out Zacks.com for more information on our screening capabilities, Rank, and all our articles as well.
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Is VWEHX a Strong Bond Fund Right Now?
If you have been looking for High Yield - Bonds funds, a place to start could be Vanguard High-Yield Corporate Investor (VWEHX - Free Report) . VWEHX has a Zacks Mutual Fund Rank of 1 (Strong Buy), which is based on nine forecasting factors like size, cost, and past performance.
Objective
VWEHX is part of the High Yield - Bonds section, which is a segment that boasts many possible options. Often referred to as " junk " bonds, High Yield - Bonds funds sit below investment grade, meaning they are at a high default risk compared to their investment grade peers. However, one advantage to junk bonds is that they generally pay out higher yields while posing similar interest rate risks to their investment grade counterparts.
History of Fund/Manager
Vanguard Group is based in Malvern, PA, and is the manager of VWEHX. Vanguard High-Yield Corporate Investor made its debut in December of 1978, and since then, VWEHX has accumulated about $3.56 billion in assets, per the most up-to-date date available. Michael L. Hong is the fund's current manager and has held that role since February of 2008.
Performance
Investors naturally seek funds with strong performance. This fund carries a 5-year annualized total return of 4.41%, and it sits 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 6.95%, 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 -20.35%, the standard deviation of VWEHX over the past three years is 4.54%. Over the past 5 years, the standard deviation of the fund is 4.65% compared to the category average of -25.69%. This makes the fund more volatile than its peers over the past half-decade.
Bond Duration
Modified duration is a measure of a given bond's interest rate sensitivity, so when judging how fixed income securities will respond in a shifting rate environment, it is an excellent figure to look at.
For investors who think interest rates will rise, this is an important factor to consider. VWEHX has a modified duration of 4.5, which suggests that the fund will decline 4.5% for every hundred-basis-point increase in interest rates.
Income
We must remember to consider the fund's average coupon, as income is traditionally a big reason for purchasing a fixed income security. A fund's average coupon is simply its average payout in a given year. For example, this fund's average coupon of 5.7% means that a $10,000 investment should result in a yearly payout of $570.
For those seeking a strong level of current income, a higher coupon is typically good news. However, it could pose a reinvestment risk 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 0.41, this fund is less volatile than a broad market index of fixed income securities. Taking this into account, VWEHX has a positive alpha of 3.01, which measures performance on a risk-adjusted basis.
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, VWEHX is a no load fund. It has an expense ratio of 0.23% compared to the category average of 0.35%. VWEHX is actually cheaper than its peers when you consider factors like cost.
This fund requires a minimum initial investment of $3,000, and each subsequent investment should be at least $1.
Bottom Line
Overall, Vanguard High-Yield Corporate Investor ( VWEHX ) has a high Zacks Mutual Fund rank, strong performance, worse downside risk, and lower fees compared to its peers.
Your research on the High Yield - Bonds segment doesn't have to stop here. You can check out all the great mutual fund tools we have to offer by going to www.zacks.com/funds/mutual-funds to see the additional features we offer as well for additional information. And don't forget, Zacks has all of your needs covered on the equity side too! Make sure to check out Zacks.com for more information on our screening capabilities, Rank, and all our articles as well.