Is Vanguard LifeStrategy Moderate Growth Fund (VSMGX) a Strong Mutual Fund Pick Right Now?

Have you been searching for an Allocation Balanced fund? You might want to begin with Vanguard LifeStrategy Moderate Growth Fund (VSMGX). VSMGX holds a Zacks Mutual Fund Rank of 3 (Hold), which is based on various forecasting factors like size, cost, and past performance.

Objective

VSMGX 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

Vanguard Group is responsible for VSMGX, and the company is based out of Malvern, PA. Since Vanguard LifeStrategy Moderate Growth Fund made its debut in September of 1994, VSMGX has garnered more than $21 billion in assets. The fund is currently managed by a team of investment professionals.

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 6.53%, and it sits in the bottom 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 2.55%, which places it in the bottom third during this time-frame.

It is important to note that the product's returns may not reflect all its expenses. Any fees not reflected would lower the returns. Total returns do not reflect the fund's [%] sale charge. If sales charges were included, total returns would have been lower.

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. VSMGX's standard deviation over the past three years is 12.04% compared to the category average of 12.24%. The standard deviation of the fund over the past 5 years is 12.14% compared to the category average of 12.75%. This makes the fund less volatile than its peers over the past half-decade.

Risk Factors

With a 5-year beta of 0.64, 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. VSMGX has generated a negative alpha over the past five years of -3.64, demonstrating 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, VSMGX is a no load fund. It has an expense ratio of 0.13% compared to the category average of 0.81%. From a cost perspective, VSMGX is actually cheaper than its peers.

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

Fees charged by investment advisors have not been taken into considiration. Returns would be less if those were included.

Bottom Line

Overall, Vanguard LifeStrategy Moderate Growth Fund ( VSMGX ) has a neutral Zacks Mutual Fund rank, and in conjunction with its comparatively weak performance, average downside risk, and lower fees, Vanguard LifeStrategy Moderate Growth Fund ( VSMGX ) looks like a somewhat average choice for investors right now.

Want even more information about VSMGX? Then go over to Zacks.com and check out our mutual fund comparison tool, and all of the other great features that we have to help you with your mutual fund analysis 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.

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