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Any investors hoping to find an Investment Grade Bond - Long fund could think about starting with Vanguard Long-Term Investment-Grade Income Admiral (VWETX - Free Report) . VWETX carries a Zacks Mutual Fund Rank of 1 (Strong Buy), which is based on nine forecasting factors like size, cost, and past performance.
Objective
VWETX is part of the Investment Grade Bond - Long section, an area loaded with various investment options. Investment Grade Bond - Long funds focus on the long end of the curve, generally with bonds that mature in more than 10 years. Fixed income instruments with this maturity level usually have high duration risk, but they also compensate investors with a heftier yield, at least when compared to their short maturity counterparts. Lastly, the focus on investment grade will make funds here safer, but yields will be lower than in the junk bond category.
History of Fund/Manager
VWETX finds itself in the Vanguard Group family, based out of Malvern, PA. Vanguard Long-Term Investment-Grade Income Admiral made its debut in February of 2001, and since then, VWETX has accumulated about $14.10 billion in assets, per the most up-to-date date available. The fund is currently managed by a team of investment professionals.
Performance
Investors naturally seek funds with strong performance. This fund in particular has delivered a 5-year annualized total return of 5.86%, 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 4.08%, 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. Over the past three years, VWETX's standard deviation comes in at 7.12%, compared to the category average of 7.43%. The fund's standard deviation over the past 5 years is 7.53% compared to the category average of 7.51%. 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.
If you believe interest rates will rise, this is an important factor to look at. VWETX has a modified duration of 13.29, which suggests that the fund will decline 13.29% 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 4.8% means that a $10,000 investment should result in a yearly payout of $480.
If you are looking for a strong level of current income, a higher coupon is a good choice, though it could pose a reinvestment risk; these risks can occur 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. With a beta of 2.19, this fund is more volatile than a broad market index of fixed income securities. Taking this into account, VWETX has a positive alpha of 0.17, which measures performance on a risk-adjusted basis.
Ratings
Investors should also consider a bond's rating, which is a grade ( 'AAA' to 'D' ) given to a bond that indicates its credit quality. With this letter scale in mind, VWETX has 42.08% in high quality bonds rated at least 'AA' or higher, while 56.35% are of medium quality, with ratings of 'A' to 'BBB'. The fund has an average quality of A, and focuses on high quality securities.
Expenses
For investors, taking a closer look at cost-related metrics is key, since costs are increasingly important for mutual fund investing. Competition is heating up in this space, and a lower cost product will likely outperform its otherwise identical counterpart, all things being equal. In terms of fees, VWETX is a no load fund. It has an expense ratio of 0.12% compared to the category average of 0.83%. So, VWETX is actually cheaper than its peers from a cost perspective.
Investors should also note that the minimum initial investment for the product is $50,000 and that each subsequent investment needs to be at $1.
Bottom Line
Overall, Vanguard Long-Term Investment-Grade Income Admiral ( VWETX ) has a high Zacks Mutual Fund rank, strong performance, average downside risk, and lower fees compared to its peers.
For additional information on the Investment Grade Bond - Long 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 VWETX too 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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Is VWETX a Strong Bond Fund Right Now?
Any investors hoping to find an Investment Grade Bond - Long fund could think about starting with Vanguard Long-Term Investment-Grade Income Admiral (VWETX - Free Report) . VWETX carries a Zacks Mutual Fund Rank of 1 (Strong Buy), which is based on nine forecasting factors like size, cost, and past performance.
Objective
VWETX is part of the Investment Grade Bond - Long section, an area loaded with various investment options. Investment Grade Bond - Long funds focus on the long end of the curve, generally with bonds that mature in more than 10 years. Fixed income instruments with this maturity level usually have high duration risk, but they also compensate investors with a heftier yield, at least when compared to their short maturity counterparts. Lastly, the focus on investment grade will make funds here safer, but yields will be lower than in the junk bond category.
History of Fund/Manager
VWETX finds itself in the Vanguard Group family, based out of Malvern, PA. Vanguard Long-Term Investment-Grade Income Admiral made its debut in February of 2001, and since then, VWETX has accumulated about $14.10 billion in assets, per the most up-to-date date available. The fund is currently managed by a team of investment professionals.
Performance
Investors naturally seek funds with strong performance. This fund in particular has delivered a 5-year annualized total return of 5.86%, 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 4.08%, 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. Over the past three years, VWETX's standard deviation comes in at 7.12%, compared to the category average of 7.43%. The fund's standard deviation over the past 5 years is 7.53% compared to the category average of 7.51%. 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.
If you believe interest rates will rise, this is an important factor to look at. VWETX has a modified duration of 13.29, which suggests that the fund will decline 13.29% 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 4.8% means that a $10,000 investment should result in a yearly payout of $480.
If you are looking for a strong level of current income, a higher coupon is a good choice, though it could pose a reinvestment risk; these risks can occur 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. With a beta of 2.19, this fund is more volatile than a broad market index of fixed income securities. Taking this into account, VWETX has a positive alpha of 0.17, which measures performance on a risk-adjusted basis.
Ratings
Investors should also consider a bond's rating, which is a grade ( 'AAA' to 'D' ) given to a bond that indicates its credit quality. With this letter scale in mind, VWETX has 42.08% in high quality bonds rated at least 'AA' or higher, while 56.35% are of medium quality, with ratings of 'A' to 'BBB'. The fund has an average quality of A, and focuses on high quality securities.
Expenses
For investors, taking a closer look at cost-related metrics is key, since costs are increasingly important for mutual fund investing. Competition is heating up in this space, and a lower cost product will likely outperform its otherwise identical counterpart, all things being equal. In terms of fees, VWETX is a no load fund. It has an expense ratio of 0.12% compared to the category average of 0.83%. So, VWETX is actually cheaper than its peers from a cost perspective.
Investors should also note that the minimum initial investment for the product is $50,000 and that each subsequent investment needs to be at $1.
Bottom Line
Overall, Vanguard Long-Term Investment-Grade Income Admiral ( VWETX ) has a high Zacks Mutual Fund rank, strong performance, average downside risk, and lower fees compared to its peers.
For additional information on the Investment Grade Bond - Long 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 VWETX too 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.