Credit: Shutterstock photoIf investors are looking at the Non US - Equity fund category, Vanguard Emerging Markets Stock Index Investor VEIEX could be a potential option. VEIEX has a Zacks Mutual Fund Rank of 2 (Buy), which is based on nine forecasting factors like size, cost, and past performance.
Objective
Zacks categorizes VEIEX as Non US - Equity, a segment stacked high with options. Non US - Equity mutual funds like to invest in companies outside of the United States, an important characteristic since global mutual funds are known to keep a good portion of their portfolio stateside. These kinds of funds can often extend across all cap levels, and will typically allocate their investments between emerging and developed markets.
History of Fund/Manager
Vanguard Group is based in Malvern, PA, and is the manager of VEIEX. The Vanguard Emerging Markets Stock Index Investor made its debut in May of 1994 and VEIEX has managed to accumulate roughly $1.54 billion in assets, as of the most recently available information. Michael Perre is the fund's current manager and has held that role since August of 2008.
Performance
Obviously, what investors are looking for in these funds is strong performance relative to their peers. This fund carries a 5-year annualized total return of 4.56%, and it sits in the bottom 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 6.9%, 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. Compared to the category average of 9.75%, the standard deviation of VEIEX over the past three years is 15.03%. Over the past 5 years, the standard deviation of the fund is 14.88% compared to the category average of 9.49%. 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. VEIEX lost 62.7% in the most recent bear market and outperformed its peer group by 4.3%. This might suggest that the fund is a better choice than its peers during a bear market.
Investors should not forget about beta, an important way to measure a mutual fund's risk compared to the market as a whole. VEIEX has a 5-year beta of 0.99, which means it is likely to be as volatile as 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. The fund has produced a negative alpha over the past 5 years of -6.97, which shows that 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, VEIEX is a no load fund. It has an expense ratio of 0.32% compared to the category average of 1.28%. So, VEIEX is actually cheaper than its peers from a cost perspective.
Investors need to be aware that with this product, the minimum initial investment is $3,000; each subsequent investment needs to be at least $1.
Bottom Line
Overall, Vanguard Emerging Markets Stock Index Investor has a high Zacks Mutual Fund rank, and in conjunction with its comparatively weak performance, worse downside risk, and lower fees, Vanguard Emerging Markets Stock Index Investor looks like a great potential choice for investors right now.
This could just be the start of your research on VEIEX in the Non US - Equity category. Consider going to www.zacks.com/funds/mutual-funds for additional information about this fund, and all the others that we rank as well 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.
