Are you on the hunt for a Target Date fund? You should think about starting with Vanguard Target Retirement 2030 Fund (VTHRX). VTHRX 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 responsible for VTHRX, and the company is based out of Malvern, PA. The Vanguard Target Retirement 2030 Fund made its debut in June of 2006 and VTHRX has managed to accumulate roughly $88.43 billion in assets, as of the most recently available information. The fund is currently managed by a team of investment professionals.
Of course, investors look for strong performance in funds. VTHRX has a 5-year annualized total return of 8.37% and it sits in the middle 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 2.65%, which places it in the middle 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. Compared to the category average of 12.38%, the standard deviation of VTHRX over the past three years is 12.57%. Over the past 5 years, the standard deviation of the fund is 13.26% compared to the category average of 13.27%. This makes the fund less volatile than its peers over the past half-decade.
With a 5-year beta of 0.69, 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. VTHRX has generated a negative alpha over the past five years of -2.94, demonstrating that managers in this portfolio find it difficult to pick securities that generate better-than-benchmark returns.
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, VTHRX is a no load fund. It has an expense ratio of 0.08% compared to the category average of 0.38%. So, VTHRX is actually cheaper than its peers from a cost perspective.
Investors need to be aware that with this product, the minimum initial investment is $1,000; each subsequent investment needs to be at least $1.
Fees charged by investment advisors have not been taken into considiration. Returns would be less if those were included.
Don't stop here for your research on Target Date 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 VTHRX to its peers 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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