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Is Vanguard Emerging Markets Select Stock Investor (VMMSX) a Strong Mutual Fund Pick Right Now?

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There are plenty of choices in the Non US - Equity category, but where should you start your research? Well, one fund that you should consider investigating is Vanguard Emerging Markets Select Stock Investor (VMMSX). VMMSX bears a Zacks Mutual Fund Rank of 3 (Hold), which is based on nine forecasting factors like size, cost, and past performance.

Objective

We classify VMMSX in the Non US - Equity category, which is an area rife with potential choices. Investing in companies outside the United States is how Non US - Equity funds set themselves apart, since global funds tend to keep a good portion of their portfolio stateside. Many of these funds like to allocate across emerging and developed markets, and will often focus on all cap levels.

History of Fund/Manager

VMMSX is a part of the Vanguard Group family of funds, a company based out of Malvern, PA. Since Vanguard Emerging Markets Select Stock Investor made its debut in June of 2011, VMMSX has garnered more than $564.31 million in assets. A team of investment professionals is the fund's current manager.

Performance

Of course, investors look for strong performance in funds. This fund in particular has delivered a 5-year annualized total return of 1.96%, and is in the bottom third among its category peers. Investors who prefer analyzing shorter time frames should look at its 3-year annualized total return of 10.52%, 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. Compared to the category average of 12.62%, the standard deviation of VMMSX over the past three years is 14.86%. The standard deviation of the fund over the past 5 years is 15.54% compared to the category average of 12.65%. 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.

Even still, the fund has a 5-year beta of 1.01, so investors should note that it is hypothetically as volatile as the market at large. 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. The fund has produced a negative alpha over the past 5 years of -7.75, which shows that managers in this portfolio find it difficult to pick securities that generate better-than-benchmark returns.

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, VMMSX is a no load fund. It has an expense ratio of 0.97% compared to the category average of 1.25%. From a cost perspective, VMMSX 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 Emerging Markets Select Stock Investor ( VMMSX ) has a neutral Zacks Mutual Fund rank, and in conjunction with its comparatively similar performance, average downside risk, and lower fees, this fund looks like a somewhat average choice for investors right now.

For additional information on this product, or to compare it to other mutual funds in the Non US - Equity, make sure to go to www.zacks.com/funds/mutual-funds for additional information. And don't forget, Zacks has all of your needs covered on the equity side too! Make sure to check out Zacks.com for more information on our screening capabilities, Rank, and all our articles as well.

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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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