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Is Value Line Income & Growth Investor (VALIX) a Strong Mutual Fund Pick Right Now?

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Having trouble finding an Allocation Balanced fund? Value Line Income & Growth Investor (VALIX) is a potential starting point. VALIX carries a Zacks Mutual Fund Rank of 1 (Strong Buy), which is based on nine forecasting factors like size, cost, and past performance.

Objective

The world of Zacks' Allocation Balanced funds is an area filled with options, such as VALIX. These funds like to invest in a variety of asset types, finding a balance between stocks, bonds, cash, and sometimes even precious metals and commodities; they are mostly categorized by their respective asset allocation. For investors, Allocation Balanced funds can provide an entry point into diversified mutual funds, and present core holding options for a portfolio of funds.

History of Fund/Manager

Value Line is responsible for VALIX, and the company is based out of New York, NY. Since Value Line Income & Growth Investor made its debut in October of 1952, VALIX has garnered more than $491.74 million in assets. The fund's current manager, Liane Rosenberg, has been in charge of the fund since May of 2011.

Performance

Investors naturally seek funds with strong performance. This fund has delivered a 5-year annualized total return of 11.23%, and it sits in the top third among its category peers. But if you are looking for a shorter time frame, it is also worth looking at its 3-year annualized total return of 15.47%, 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 VALIX over the past three years is 9.07% compared to the category average of 7.79%. The fund's standard deviation over the past 5 years is 8.71% compared to the category average of 7.63%. This makes the fund more volatile than its peers over the past half-decade.

Risk Factors

Investors cannot discount the risks to this segment though, as it is always important to remember the downside for any potential investment. In VALIX's case, the fund lost 29.47% in the most recent bear market and underperformed its peer group by 6.67%. This means that the fund could possibly be a worse choice than its peers during a down market environment.

Investors should not forget about beta, an important way to measure a mutual fund's risk compared to the market as a whole. VALIX has a 5-year beta of 0.8, which means it is likely to be less volatile than the market average. Because alpha represents a portfolio's performance on a risk-adjusted basis relative to a benchmark, which is the S&P 500 in this case, one should pay attention to this metric as well. VALIX has generated a positive alpha over the past five years of 0.09, demonstrating 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 principally on equities that are traded in the United States.

This fund is currently holding about 82.31% stock in stocks, which have an average market capitalization of $143.83 billion. With turnover at about 78%, this fund makes more traders than comparable funds in a given year.

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, VALIX is a no load fund. It has an expense ratio of 1.12% compared to the category average of 0.89%. VALIX is actually more expensive than its peers when you consider factors like cost.

While the minimum initial investment for the product is $1,000, investors should also note that each subsequent investment needs to be at least $25.

Bottom Line

Overall, Value Line Income & Growth Investor ( VALIX ) has a high Zacks Mutual Fund rank, and in conjunction with its comparatively strong performance, average downside risk, and higher fees, Value Line Income & Growth Investor ( VALIX ) looks like a good potential choice for investors right now.

For additional information on the Allocation Balanced area of the mutual fund world, make sure to check out www.zacks.com/funds/mutual-funds . There, you can see more about the ranking process, and dive even deeper into VALIX too 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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The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.


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

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