If you have been looking for Allocation Balanced funds, it would not be wise to start your search with Vanguard LifeStrategy Income Fund (VASIX). VASIX bears a Zacks Mutual Fund Rank of 4 (Sell), which is based on nine forecasting factors like size, cost, and past performance.
VASIX is one of many Zacks' Allocation Balanced mutual funds to pick from. Allocation Balanced funds seek to invest in 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. Investors utilize Allocation Balanced funds as a way to get a good start with diversified mutual funds, as well as for core holdings in a portfolio of funds.
History of Fund/Manager
VASIX is a part of the Vanguard Group family of funds, a company based out of Malvern, PA. The Vanguard LifeStrategy Income Fund made its debut in September of 1994 and VASIX has managed to accumulate roughly $4.29 billion in assets, as of the most recently available information. A team of investment professionals is the fund's current manager.
Of course, investors look for strong performance in funds. This fund in particular has delivered a 5-year annualized total return of 4.04%, and it sits 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 4.24%, which places it in the bottom 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 VASIX over the past three years is 3% compared to the category average of 6.98%. Over the past 5 years, the standard deviation of the fund is 3.1% compared to the category average of 7.45%. This makes the fund less volatile than its peers over the past half-decade.
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 VASIX's case, the fund lost 15.44% in the most recent bear market and outperformed its peer group by 20.94%. This means that the fund could possibly be a better choice than its peers during a down market environment.
Nevertheless, with a 5-year beta of 0.18, the fund is likely to be less 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. VASIX has generated a positive alpha over the past five years of 1.3, demonstrating that managers in this portfolio are skilled in picking securities that generate better-than-benchmark returns.
As competition heats up in the mutual fund market, costs become increasingly important. Compared to its otherwise identical counterpart, a low-cost product will be an outperformer, all other things being equal. Thus, taking a closer look at cost-related metrics is vital for investors. In terms of fees, VASIX is a no load fund. It has an expense ratio of 0.11% compared to the category average of 0.89%. So, VASIX is actually cheaper than its peers from a cost perspective.
Investors should also note that the minimum initial investment for the product is $3,000 and that each subsequent investment needs to be at $1.
Overall, Vanguard LifeStrategy Income Fund ( VASIX ) has a low Zacks Mutual Fund rank, similar performance, average downside risk, and lower fees compared to its peers.
Your research on the Allocation Balanced segment doesn't have to stop here. You can check out all the great mutual fund tools we have to offer by going to www.zacks.com/funds/mutual-funds to see the additional features we offer as well for additional information. For analysis of the rest of your portfolio, make sure to visit Zacks.com for our full suite of tools which will help you investigate all of your stocks and funds in one place.
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