Is VWALX a Strong Bond Fund Right Now?
On the lookout for a Mutual Fund Bond fund? Starting with Vanguard High-Yield Tax-Exempt Admiral (VWALX) is one possibility. VWALX possesses a Zacks Mutual Fund Rank of 1 (Strong Buy), which is based on various forecasting factors like size, cost, and past performance.
History of Fund/Manager
VWALX finds itself in the Vanguard Group family, based out of Malvern, PA. The Vanguard High-Yield Tax-Exempt Admiral made its debut in November of 2001 and VWALX has managed to accumulate roughly $13.08 billion in assets, as of the most recently available information. The fund's current manager, Mathew Kiselak, has been in charge of the fund since July of 2010.
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 2.38%, and it sits 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 -0.8%, 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. Over the past three years, VWALX's standard deviation comes in at 8.88%, compared to the category average of 11.02%. Looking at the past 5 years, the fund's standard deviation is 8.07% compared to the category average of 11.14%. This makes the fund less volatile than its peers over the past half-decade.
This fund has a beta of 1.11, meaning that it is more volatile than a broad market index of fixed income securities. Taking this into account, VWALX has a positive alpha of 0.37, which measures performance on a risk-adjusted basis.
Ratings
Investors should also consider a bond's rating, which is a grade ( 'AAA' to 'D' ) given to a bond that indicates its credit quality. With this letter scale in mind, VWALX has 22.97% in high quality bonds rated at least 'AA' or higher, while 54.27% are of medium quality, with ratings of 'A' to 'BBB'. The fund has an average quality of A, and focuses on high quality securities.
Expenses
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, VWALX is a no load fund. It has an expense ratio of 0.09% compared to the category average of 0.80%. From a cost perspective, VWALX is actually cheaper than its peers.
Investors should also note that the minimum initial investment for the product is $50,000 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 High-Yield Tax-Exempt Admiral ( VWALX ) has a high Zacks Mutual Fund rank, and in conjunction with its comparatively strong performance, average downside risk, and lower fees, this fund looks like a good potential choice for investors right now.
Your research on the Mutual Fund Bond segment doesn't have to stop here. You can check out all the great mutual fund tools we have to offer by going to www.zacks.com/funds/mutual-funds to see the additional features we offer 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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