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Government - Bonds: Misc fund seekers should consider taking a look at Vanguard Inflation Pro Security Fund (VIPSX - Free Report) . VIPSX bears a Zacks Mutual Fund Rank of 1 (Strong Buy), which is based on nine forecasting factors like size, cost, and past performance.
Objective
We classify VIPSX in the Government - Bonds: Misc category, an area rife with potential choices. Government - Bonds: Misc funds hold securities issued by the federal government of the United States of America. These are seen as extremely low risk securities from a default perspective, and are often regarded as risk-free assets. This category stretches across the curve, so the yields and interest rate sensitivity will vary, though a mixed approach generally results in a medium yield and risk profile.
History of Fund/Manager
Vanguard Group is responsible for VIPSX, and the company is based out of Malvern, PA. Vanguard Inflation Pro Security Fund made its debut in June of 2000, and since then, VIPSX has accumulated about $3.41 billion in assets, per the most up-to-date date available. The fund's current manager, Gemma Wright Casparius, has been in charge of the fund since August of 2011.
Performance
Obviously, what investors are looking for in these funds is strong performance relative to their peers. This fund has delivered a 5-year annualized total return of 2.06%, 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 2.82%, 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. VIPSX's standard deviation over the past three years is 2.91% compared to the category average of 0.15%. The standard deviation of the fund over the past 5 years is 3.5% compared to the category average of -3.84%. 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 those that believe interest rates will rise, this is an important factor to consider. VIPSX has a modified duration of 7.58, which suggests that the fund will decline 7.58% for every hundred-basis-point increase in interest rates.
Income
It is important to consider the fund's average coupon because income is often a big reason for purchasing a fixed income security. This metric calculates the fund's average payout in a given year. For example, this fund's average coupon of 0.86% means that a $10,000 investment should result in a yearly payout of $86.
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. This fund has a beta of 0.89, meaning that it is less volatile than a broad market index of fixed income securities. Taking this into account, VIPSX has a negative alpha of -0.95, which measures performance on a risk-adjusted basis.
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, VIPSX is a no load fund. It has an expense ratio of 0.20% compared to the category average of 0.32%. So, VIPSX is actually cheaper than its peers from a cost perspective.
This fund requires a minimum initial investment of $3,000, and each subsequent investment should be at least $1.
Bottom Line
Overall, Vanguard Inflation Pro Security Fund ( VIPSX ) has a high Zacks Mutual Fund rank, and in conjunction with its comparatively strong performance, worse downside risk, and lower fees, Vanguard Inflation Pro Security Fund ( VIPSX ) looks like a good potential choice for investors right now.
Want even more information about VIPSX? 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. Want to learn even more? We have a full suite of tools on stocks that you can use to find the best choices for your portfolio too, no matter what kind of investor you are.
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Is VIPSX a Strong Bond Fund Right Now?
Government - Bonds: Misc fund seekers should consider taking a look at Vanguard Inflation Pro Security Fund (VIPSX - Free Report) . VIPSX bears a Zacks Mutual Fund Rank of 1 (Strong Buy), which is based on nine forecasting factors like size, cost, and past performance.
Objective
We classify VIPSX in the Government - Bonds: Misc category, an area rife with potential choices. Government - Bonds: Misc funds hold securities issued by the federal government of the United States of America. These are seen as extremely low risk securities from a default perspective, and are often regarded as risk-free assets. This category stretches across the curve, so the yields and interest rate sensitivity will vary, though a mixed approach generally results in a medium yield and risk profile.
History of Fund/Manager
Vanguard Group is responsible for VIPSX, and the company is based out of Malvern, PA. Vanguard Inflation Pro Security Fund made its debut in June of 2000, and since then, VIPSX has accumulated about $3.41 billion in assets, per the most up-to-date date available. The fund's current manager, Gemma Wright Casparius, has been in charge of the fund since August of 2011.
Performance
Obviously, what investors are looking for in these funds is strong performance relative to their peers. This fund has delivered a 5-year annualized total return of 2.06%, 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 2.82%, 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. VIPSX's standard deviation over the past three years is 2.91% compared to the category average of 0.15%. The standard deviation of the fund over the past 5 years is 3.5% compared to the category average of -3.84%. 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 those that believe interest rates will rise, this is an important factor to consider. VIPSX has a modified duration of 7.58, which suggests that the fund will decline 7.58% for every hundred-basis-point increase in interest rates.
Income
It is important to consider the fund's average coupon because income is often a big reason for purchasing a fixed income security. This metric calculates the fund's average payout in a given year. For example, this fund's average coupon of 0.86% means that a $10,000 investment should result in a yearly payout of $86.
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. This fund has a beta of 0.89, meaning that it is less volatile than a broad market index of fixed income securities. Taking this into account, VIPSX has a negative alpha of -0.95, which measures performance on a risk-adjusted basis.
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, VIPSX is a no load fund. It has an expense ratio of 0.20% compared to the category average of 0.32%. So, VIPSX is actually cheaper than its peers from a cost perspective.
This fund requires a minimum initial investment of $3,000, and each subsequent investment should be at least $1.
Bottom Line
Overall, Vanguard Inflation Pro Security Fund ( VIPSX ) has a high Zacks Mutual Fund rank, and in conjunction with its comparatively strong performance, worse downside risk, and lower fees, Vanguard Inflation Pro Security Fund ( VIPSX ) looks like a good potential choice for investors right now.
Want even more information about VIPSX? 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. Want to learn even more? We have a full suite of tools on stocks that you can use to find the best choices for your portfolio too, no matter what kind of investor you are.