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Is VWEAX a Strong Bond Fund Right Now?

On the lookout for a High Yield - Bonds fund? Starting with Vanguard High-Yield Corporate Admiral (VWEAX) is one possibility. VWEAX bears a Zacks Mutual Fund Rank of 1 (Strong Buy), which is based on nine forecasting factors like size, cost, and past performance.

Objective

We note that VWEAX is a High Yield - Bonds option, which is an area loaded with different investment choices. High Yield - Bonds funds are often known as " junk " bonds since they are below investment grade. This means they are at an elevated risk of default, at least when compared to their investment grade peers. On the plus side, junk bonds generally pay out higher yields, all while posing similar interest rate risks as we see with their investment grade counterparts.

History of Fund/Manager

VWEAX finds itself in the Vanguard Group family, based out of Malvern, PA. Vanguard High-Yield Corporate Admiral made its debut in November of 2001, and since then, VWEAX has accumulated about $23.03 billion in assets, per the most up-to-date date available. Michael L. Hong is the fund's current manager and has held that role since February of 2008.

Performance

Of course, investors look for strong performance in funds. This fund carries a 5-year annualized total return of 5.52%, and it sits in the top 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 4.71%, 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. Compared to the category average of 11.27%, the standard deviation of VWEAX over the past three years is 8.25%. Looking at the past 5 years, the fund's standard deviation is 7.05% compared to the category average of 9.94%. This makes the fund less volatile than its peers over the past half-decade.

With a beta of 0.69, this fund is less volatile than a broad market index of fixed income securities. Taking this into account, VWEAX has a positive alpha of 2.58, which measures performance on a risk-adjusted basis.

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, VWEAX is a no load fund. It has an expense ratio of 0.13% compared to the category average of 1.01%. VWEAX 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 $50,000 and that each subsequent investment needs to be at $1.

Bottom Line

Overall, Vanguard High-Yield Corporate Admiral ( VWEAX ) has a high Zacks Mutual Fund rank, and in conjunction with its comparatively strong performance, average downside risk, and lower fees, Vanguard High-Yield Corporate Admiral ( VWEAX ) looks like a good potential choice for investors right now.

For additional information on this product, or to compare it to other mutual funds in the High Yield - Bonds, make sure to go to www.zacks.com/funds/mutual-funds for additional information. And don't forget, Zacks has all of your needs covered on the equity side too! Make sure to check out Zacks.com for more information on our screening capabilities, Rank, and all our articles as well.


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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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