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Is Vanguard Developed Markets Index Admiral (VTMGX) a Strong Mutual Fund Pick Right Now?

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If investors are looking at the Non US - Equity fund category, Vanguard Developed Markets Index Admiral (VTMGX - Free Report) could be a potential option. VTMGX 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 VTMGX in the Non US - Equity category, which is an area rife with potential choices. Investing in companies outside the United States is how Non US - Equity funds set themselves apart, since global funds tend to keep a good portion of their portfolio stateside. Many of these funds like to allocate across emerging and developed markets, and will often focus on all cap levels.

History of Fund/Manager

Vanguard Group is based in Malvern, PA, and is the manager of VTMGX. The Vanguard Developed Markets Index Admiral made its debut in August of 1999 and VTMGX has managed to accumulate roughly $17.93 billion in assets, as of the most recently available information. Christine D. Franquin is the fund's current manager and has held that role since February of 2013.

Performance

Investors naturally seek funds with strong performance. This fund in particular has delivered a 5-year annualized total return of 2.5%, and is in the middle third among its category peers. Investors who prefer analyzing shorter time frames should look at its 3-year annualized total return of 8.85%, 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 10.12%, the standard deviation of VTMGX over the past three years is 11.4%. The standard deviation of the fund over the past 5 years is 12.08% compared to the category average of 10.41%. 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. In VTMGX's case, the fund lost 57.06% in the most recent bear market and outperformed its peer group by 1.41%. This means that the fund could possibly be a better choice than its peers during a down market environment.

Investors should note that the fund has a 5-year beta of 0.84, so it is likely going to be less volatile than the market at large. Another factor to consider is alpha, as it reflects a portfolio's performance on a risk-adjusted basis relative to a benchmark-in this case, the S&P 500. VTMGX's 5-year performance has produced a negative alpha of -5.95, which means managers in this portfolio find it difficult to pick securities that generate better-than-benchmark returns.

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, VTMGX is a no load fund. It has an expense ratio of 0.07% compared to the category average of 1.20%. Looking at the fund from a cost perspective, VTMGX is actually cheaper than its peers.

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.

Bottom Line

Overall, Vanguard Developed Markets Index Admiral ( VTMGX ) has a high Zacks Mutual Fund rank, similar performance, average downside risk, and lower fees compared to its peers.

Want even more information about VTMGX? 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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