Technology

Is Vanguard Mid-Cap Index Admiral (VIMAX) a Strong Mutual Fund Pick Right Now?

Investors in search of an Index fund might want to consider looking at Vanguard Mid-Cap Index Admiral (VIMAX). VIMAX has no Zacks Mutual Fund Rank, but we have been able to look into other metrics like performance, volatility, and cost.

History of Fund/Manager

Vanguard Group is based in Malvern, PA, and is the manager of VIMAX. Since Vanguard Mid-Cap Index Admiral made its debut in November of 2001, VIMAX has garnered more than $43.88 billion in assets. The fund is currently managed by Donald M. Butler who has been in charge of the fund since November of 2001.

Performance

Investors naturally seek funds with strong performance. This fund has delivered a 5-year annualized total return of 8.04%, and is 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 10.05%, 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 VIMAX over the past three years is 13.3% compared to the category average of 8.87%. The fund's standard deviation over the past 5 years is 12.89% compared to the category average of 9.29%. 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 VIMAX's case, the fund lost 53.51% in the most recent bear market and underperformed comparable funds by 8%. This means that the fund could possibly be a worse choice than its peers during a down market environment.

Investors should note that the fund has a 5-year beta of 1.04, so it is likely going to be more volatile than 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 -2.1, which shows that managers in this portfolio find it difficult to pick securities that generate better-than-benchmark returns.

Holdings

Investigating 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 mostly on equities that are traded in the United States.

The mutual fund currently has 85.76% of its holdings in stocks, which have an average market capitalization of $16.53 billion. The fund has the heaviest exposure to the following market sectors:

  1. Technology
  2. Finance

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, VIMAX is a no load fund. It has an expense ratio of 0.05% compared to the category average of 0.76%. VIMAX is actually cheaper than its peers when you consider factors like cost.

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.

Bottom Line

This could just be the start of your research on VIMAXin the Index 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 want to check out our stock reports as well, make sure to go to Zacks.com to see all of the great tools we have to offer, including our time-tested Zacks Rank.


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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.