On the lookout for an Allocation Balanced fund? Starting with Vanguard Balanced Index Administrative VBIAX is one possibility. VBIAX possesses a Zacks Mutual Fund Rank of 2 (Buy), which is based on nine forecasting factors like size, cost, and past performance.
VBIAX is classified in the Allocation Balanced segment by Zacks, which is an area full of possibilities. Here, investors are able to get a good head start with diversified mutual funds, and play around with core holding options for a portfolio of funds. Allocation Balanced funds look to invest across a balance of asset types, like stocks, bonds, and cash, though including precious metals or commodities is not unusual; these funds are mostly categorized by their respective asset allocation.
History of Fund/Manager
Vanguard Group is based in Malvern, PA, and is the manager of VBIAX. Vanguard Balanced Index Administrative made its debut in November of 2000, and since then, VBIAX has accumulated about $23.68 billion in assets, per the most up-to-date date available. The fund is currently managed by a team of investment professionals.
Of course, investors look for strong performance in funds. VBIAX has a 5-year annualized total return of 9.23% and is 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 6.83%, 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. The standard deviation of VBIAX over the past three years is 6.15% compared to the category average of 8.17%. The fund's standard deviation over the past 5 years is 6.02% compared to the category average of 8.08%. This makes the fund less volatile than its peers over the past half-decade.
Investors cannot discount the risks to this segment though, as it is always important to remember the downside for any potential investment. VBIAX lost 32.49% in the most recent bear market and outperformed its peer group by 3.71%. This means that the fund could possibly be a better choice than its peers during a down market environment.
Nevertheless, investors should also note that the fund has a 5-year beta of 0.6, which means it is hypothetically 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. Over the past 5 years, the fund has a positive alpha of 0.36. This means that managers in this portfolio are skilled in picking securities that generate better-than-benchmark returns.
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, VBIAX is a no load fund. It has an expense ratio of 0.07% compared to the category average of 0.90%. From a cost perspective, VBIAX is actually cheaper than its peers.
While the minimum initial investment for the product is $10,000, investors should also note that each subsequent investment needs to be at least $1.
Overall, Vanguard Balanced Index Administrative 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 Allocation Balanced, make sure to go to www.zacks.com/funds/mutual-funds for additional information. Zacks provides a full suite of tools to help you analyze your portfolio - both funds and stocks - in the most efficient way possible. View All Zacks #1 Ranked Mutual Funds
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