There are plenty of choices in the Index category, but where should you start your research? Well, one fund that might be worth investigating is Vanguard Total Bond Market Index Institutional (VBTIX). VBTIX 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
VBTIX finds itself in the Vanguard Group family, based out of Malvern, PA. Vanguard Total Bond Market Index Institutional debuted in September of 1995. Since then, VBTIX has accumulated assets of about $44.19 billion, according to the most recently available information. The fund's current manager, Joshua C. Barrickman, has been in charge of the fund since February of 2013.
Investors naturally seek funds with strong performance. VBTIX has a 5-year annualized total return of 2.68% 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 2.48%, 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 8.62%, the standard deviation of VBTIX over the past three years is 3.16%. Looking at the past 5 years, the fund's standard deviation is 3% compared to the category average of 9.17%. This makes the fund less volatile than its peers over the past half-decade.
Investors should always remember the downsides to a potential investment, and this segment carries some risks one should be aware of. VBTIX gained 6.27% in the most recent bear market and outperformed its peer group by 52.01%. This means that the fund could possibly be a better choice than its peers during a down market environment.
Investors should not forget about beta, an important way to measure a mutual fund's risk compared to the market as a whole. VBTIX has a 5-year beta of 1.04, which means it is likely to be more volatile than the market average. Alpha is an additional metric to take into consideration, since it represents a portfolio's performance on a risk-adjusted basis relative to a benchmark, which in this case, is the S&P 500. With a negative alpha of -0.09, managers in this portfolio find it difficult to pick securities that generate better-than-benchmark returns.
Costs are increasingly important for mutual fund investing, and particularly as competition heats up in this market. And all things being equal, a lower cost product will outperform its otherwise identical counterpart, so taking a closer look at these metrics is key for investors. In terms of fees, VBTIX is a no load fund. It has an expense ratio of 0.04% compared to the category average of 0.76%. Looking at the fund from a cost perspective, VBTIX is actually cheaper than its peers.
While the minimum initial investment for the product is $5 million, investors should also note that each subsequent investment needs to be at least $1.
This could just be the start of your research on VBTIXin 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. Zacks provides a full suite of tools to help you analyze your portfolio - both funds and stocks - in the most efficient way possible.
Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report
Get Your Free (VBTIX): Fund Analysis Report
To read this article on Zacks.com click here.
The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.