Any investors hoping to find an International Bond - Developed fund could think about starting with Vanguard Total International Bond Index Admiral (VTABX - Free Report) . VTABX holds a Zacks Mutual Fund Rank of 2 (Buy), which is based on nine forecasting factors like size, cost, and past performance.
Zacks categorizes VTABX as International Bond - Developed, a segment that is packed with options. Focusing on fixed income securities outside from developed nations besides the U.S. International Bond - Developed funds invest in assets from countries like Japan, Germany, the UK, France, and Australia. These holdings dominate the top holdings, and funds in this category offer geographic diversification; however, they can also introduce currency risk.
History of Fund/Manager
Vanguard Group is based in Malvern, PA, and is the manager of VTABX. Since Vanguard Total International Bond Index Admiral made its debut in May of 2013, VTABX has garnered more than $48.12 billion in assets. The fund's current manager, Joshua C. Barrickman, has been in charge of the fund since May of 2013.
Investors naturally seek funds with strong performance. This fund has delivered a 5-year annualized total return of 4.12%, and it sits in the top third among its category peers. If you're interested in shorter time frames, do not dismiss looking at the fund's 3-year annualized total return of 3.2%, which places it in the top third during this time-frame.
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.
If you believe interest rates will rise, this is an important factor to look at. VTABX has a modified duration of 7.91, which suggests that the fund will decline 7.91% for every hundred-basis-point increase in interest rates.
Income is often a big reason for purchasing a fixed income security, so it is 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 2.27% means that a $10,000 investment should result in a yearly payout of $227.
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.
Income is only one part of the bond picture, investors also need to consider risk relative to broad benchmarks. VTABX carries a beta of 0.65, meaning that the fund is less volatile than a broad market index of fixed income securities. With this in mind, it has a positive alpha of 1.88, which measures performance on a risk-adjusted basis.
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, VTABX is a no load fund. It has an expense ratio of 0.11% compared to the category average of 0.33%. VTABX is actually cheaper than its peers when you consider factors like cost.
Investors should also note that the minimum initial investment for the product is $3,000 and that each subsequent investment needs to be at $1.
This puts this fund from Vanguard Group in the top 40% of all mutual funds we have a rank on right now. As a result, this is likely an excellent choice for investors seeking an option in the International Bond - Developed category.
Don't stop here for your research on International Bond - Developed funds. We also have plenty more on our site in order to help you find the best possible fund for your portfolio. Make sure to check out www.zacks.com/funds/mutual-funds for more information about the world of funds, and feel free to compare VTABX to its peers as well 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.