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Is VWITX a Strong Bond Fund Right Now?

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Having trouble finding a Muni - Bonds fund? Vanguard Intermediate-Term Tax-Exempt Investor (VWITX - Free Report) is a potential starting point. VWITX possesses 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 VWITX in the Muni - Bonds category, an area rife with potential choices. Muni - Bonds funds focus their investments on debt securities issued by state and local governments. These are typically used to pay for the construction of infrastructure, the operation of public schools, and other municipal functions. These securities can come in the form of revenue bonds, which are backed by taxes, as well as " general obligation " bonds that are not backed by a defined source. Investors are usually interested that come with most municipal bonds, which can be especially important for those in higher tax brackets.

History of Fund/Manager

Vanguard Group is based in Malvern, PA, and is the manager of VWITX. The Vanguard Intermediate-Term Tax-Exempt Investor made its debut in September of 1977 and VWITX has managed to accumulate roughly $3.49 billion in assets, as of the most recently available information. The fund is currently managed by James D'Arcy who has been in charge of the fund since June of 2013.

Performance

Of course, investors look for strong performance in funds. This fund in particular has delivered a 5-year annualized total return of 3.35%, and it sits in the top third among its category peers. Investors who prefer analyzing shorter time frames should look at its 3-year annualized total return of 3.43%, 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, VWITX's standard deviation comes in at 3.54%, compared to the category average of 8.08%. The standard deviation of the fund over the past 5 years is 3.41% compared to the category average of 7.53%. This makes the fund less volatile than its peers over the past half-decade.

This fund has a beta of 0.67, meaning that it is less volatile than a broad market index of fixed income securities. Taking this into account, VWITX has a negative alpha of -0.14, 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, VWITX has 70.18% in high quality bonds rated at least 'AA' or higher, while 27.9% are of medium quality, with ratings of 'A' to 'BBB'. The fund has an average quality of AA, 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, VWITX is a no load fund. It has an expense ratio of 0.17% compared to the category average of 0.82%. So, VWITX 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 Intermediate-Term Tax-Exempt Investor ( VWITX ) has a high Zacks Mutual Fund rank, and in conjunction with its comparatively strong performance, average downside risk, and lower fees, this fund looks like a good potential choice for investors right now.

For additional information on this product, or to compare it to other mutual funds in the Muni - Bonds, make sure to go to www.zacks.com/funds/mutual-funds for additional information. If you are more of a stock investor, make sure to also check out our Zacks Rank, and our full suite of tools we have available for novice and professional investors alike.


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