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Is Vanguard Consumer Discret Index Administrative (VCDAX) a Strong Mutual Fund Pick Right Now?

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There are plenty of choices in the Large Cap Growth category, but where should you start your research? Well, one fund that might be worth investigating is Vanguard Consumer Discret Index Administrative VCDAX . VCDAX 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 VCDAX 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 based in Malvern, PA, and is the manager of VCDAX. Vanguard Consumer Discret Index Administrative made its debut in January of 2004, and since then, VCDAX has accumulated about $305.98 million in assets, per the most up-to-date date available. Michael A. Johnson is the fund's current manager and has held that role since December of 2010.

Performance

Investors naturally seek funds with strong performance. This fund carries a 5-year annualized total return of 13.96%, 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 11.86%, 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. The standard deviation of VCDAX over the past three years is 11.59% compared to the category average of 11.88%. Looking at the past 5 years, the fund's standard deviation is 11.8% compared to the category average of 11.33%. This makes the fund more volatile than its peers over the past half-decade.

Risk Factors

One cannot ignore the volatility of this segment, however, as it is always important for investors to remember the downside to any potential investment. In the most recent bear market, VCDAX lost 53.95% and outperformed its peer group by 4.98%. This makes the fund a possibly better choice than its peers during a sliding market environment.

Investors should note that the fund has a 5-year beta of 1.1, so it is likely going to be more volatile than the market at large. 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. VCDAX's 5-year performance has produced a negative alpha of -0.22, which means managers in this portfolio find it difficult to pick securities that generate better-than-benchmark returns.

Expenses

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, VCDAX is a no load fund. It has an expense ratio of 0.10% compared to the category average of 1.10%. VCDAX is actually cheaper than its peers when you consider factors like cost.

While the minimum initial investment for the product is $100,000, investors should also note that each subsequent investment needs to be at least $1.

Bottom Line

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

Don't stop here for your research on Large Cap Growth 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 VCDAX to its peers as well 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.

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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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