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Is Vanguard Growth Index Investor (VIGRX) a Strong Mutual Fund Pick Right Now?


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If you've been stuck searching for Large Cap Growth funds, consider Vanguard Growth Index Investor VIGRX as a possibility. VIGRX 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 VIGRX in the Large Cap Growth category, an area rife with potential choices. Large Cap Growth funds invest in many large U.S. companies that are expected to grow much faster compared to other large-cap stocks. To be considered large-cap, companies must have a market cap over $10 billion.

History of Fund/Manager

Vanguard Group is responsible for VIGRX, and the company is based out of Malvern, PA. Vanguard Growth Index Investor made its debut in November of 1992, and since then, VIGRX has accumulated about $3.18 billion in assets, per the most up-to-date date available. The fund is currently managed by Gerard C. O'Reilly who has been in charge of the fund since December of 1994.

Performance

Investors naturally seek funds with strong performance. VIGRX has a 5-year annualized total return of 14.15% and is in the middle 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 10.94%, which places it in the middle 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, VIGRX's standard deviation comes in at 11.35%, compared to the category average of 9.74%. The fund's standard deviation over the past 5 years is 10.82% compared to the category average of 9.53%. This makes the fund more volatile than its peers over the past half-decade.

Risk Factors

It's always important to be aware of the downsides to any future investment, so one should not discount the risks that come with this segment. In VIGRX's case, the fund lost 47.19% in the most recent bear market and outperformed its peer group by 1.79%. These results could imply that the fund is a better choice than its peers during a sliding market environment.

Nevertheless, with a 5-year beta of 1.05, the fund is likely to be more volatile than the market average. 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 0.24. This means that managers in this portfolio are skilled in picking securities that generate better-than-benchmark returns.

Holdings

Examining the equity holdings of a mutual fund is also a valuable exercise. This can show us how the manager is applying their stated methodology, as well as if there are any inherent biases in their approach. For this particular fund, the focus is mostly on equities that are traded in the United States.

Currently, this mutual fund is holding 98.62% stock in stocks, which have an average market capitalization of $162.29 billion. The fund has the heaviest exposure to the following market sectors:

  1. Technology
  2. Non-Durable
  3. Finance

With turnover at about 16%, this fund makes fewer trades than the average comparable fund.

Expenses

Costs are increasingly important for mutual fund investing, and particularly as competition heats up in this market. And all things being equal, a lower cost product will outperform its otherwise identical counterpart, so taking a closer look at these metrics is key for investors. In terms of fees, VIGRX is a no load fund. It has an expense ratio of 0.18% compared to the category average of 1.12%. Looking at the fund from a cost perspective, VIGRX is actually cheaper than its peers.

While the minimum initial investment for the product is $3,000, investors should also note that each subsequent investment needs to be at least $1.

Bottom Line

Overall, Vanguard Growth Index Investor has a high Zacks Mutual Fund rank, and in conjunction with its comparatively similar performance, average downside risk, and lower fees, this fund looks like a good potential choice for investors right now.

Want even more information about VIGRX? 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. If you want to check out our stock reports as well, make sure to go to Zacks.com to see all of the great tools we have to offer, including our time-tested Zacks Rank.


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The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.



This article appears in: Investing , Mutual Funds
Referenced Symbols: VIGRX



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