Is Vanguard Total Bond Market Index Investor (VBMFX) a Strong Mutual Fund Pick Right Now?
If you’ve been stuck searching for Index funds, consider Vanguard Total Bond Market Index Investor (VBMFX) as a possibility. The fund does not have a Zacks Mutual Fund Rank, though we have been able to explore other metrics like performance, volatility, and cost.
History of Fund/Manager
VBMFX is a part of the Vanguard Group family of funds, a company based out of Malvern, PA. Vanguard Total Bond Market Index Investor debuted in December of 1986. Since then, VBMFX has accumulated assets of about $489.65 million, according to the most recently available information. Joshua Barrickman is the fund’s current manager and has held that role since February of 2013.
Performance
Of course, investors look for strong performance in funds. This fund has delivered a 5-year annualized total return of -0.62%, and it sits in the bottom 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 4.8%, which places it in the bottom third during this time-frame.
It is important to note that the product’s returns may not reflect all its expenses. Any fees not reflected would lower the returns. Total returns do not reflect the fund’s [%] sale charge. If sales charges were included, total returns would have been lower.
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. VBMFX’s standard deviation over the past three years is 6.41% compared to the category average of 12.85%. The fund’s standard deviation over the past 5 years is 6.25% compared to the category average of 13.29%. This makes the fund less volatile than its peers over the past half-decade.
Risk Factors
Investors should not forget about beta, an important way to measure a mutual fund’s risk compared to the market as a whole. VBMFX has a 5-year beta of 1, which means it is likely to be as volatile as the market average. Alpha is an additional metric to take into consideration, since it represents a portfolio’s performance on a risk-adjusted basis relative to a benchmark, which in this case, is the S&P 500. VBMFX has generated a negative alpha over the past five years of -0.18, demonstrating that managers in this portfolio find it difficult to pick securities that generate better-than-benchmark returns.
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, VBMFX is a no load fund. It has an expense ratio of 0.15% compared to the category average of 0.93%. So, VBMFX is actually cheaper than its peers from a cost perspective.
This fund requires a minimum initial investment of $0, while there is no minimum for each subsequent investment.
Fees charged by investment advisors have not been taken into consideration. Returns would be less if those were included.
Bottom Line
Don’t stop here for your research on Index 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 VBMFX to its peers as well 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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This article originally published on Zacks Investment Research (zacks.com).
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