Is VWETX a Strong Bond Fund Right Now?
There are plenty of choices in the Investment Grade Bond - Long category, but where should you start your research? Well, one fund that might be worth investigating is Vanguard Long-Term Investment-Grade Income Admiral (VWETX). VWETX bears a Zacks Mutual Fund Rank of 2 (Buy), which is based on nine forecasting factors like size, cost, and past performance.
VWETX is classified in the Investment Grade Bond - Long segment by Zacks, an area full of possibilities. Investment Grade Bond - Long funds focus on the long end of the curve, typically by investing in bonds that mature in more than 10 years. While fixed income instruments at this maturity level usually have high duration risk, they compensate investors with a larger yield than their short-maturity counterparts. These funds tend to be safer due to their focus on investment grade, but yields will be smaller than funds in the junk bond category.
History of Fund/Manager
Vanguard Group is based in Malvern, PA, and is the manager of VWETX. The Vanguard Long-Term Investment-Grade Income Admiral made its debut in February of 2001 and VWETX has managed to accumulate roughly $15.39 billion in assets, as of the most recently available information. The fund's current manager is a team of investment professionals.
Obviously, what investors are looking for in these funds is strong performance relative to their peers. This fund in particular has delivered a 5-year annualized total return of 8.96%, 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 9.72%, 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 10.18%, the standard deviation of VWETX over the past three years is 8.86%. Looking at the past 5 years, the fund's standard deviation is 8.11% compared to the category average of 9.48%. This makes the fund less volatile than its peers over the past half-decade.
With a beta of 2.53, this fund is more volatile than a broad market index of fixed income securities. Taking this into account, VWETX has a positive alpha of 0.17, which measures performance on a risk-adjusted basis.
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, VWETX has 33.78% in high quality bonds rated at least 'AA' or higher, while 65.28% are of medium quality, with ratings of 'A' to 'BBB'. The fund has an average quality of A, and focuses on high quality securities.
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, VWETX is a no load fund. It has an expense ratio of 0.12% compared to the category average of 0.83%. From a cost perspective, VWETX is actually cheaper than its peers.
While the minimum initial investment for the product is $50,000, investors should also note that each subsequent investment needs to be at least $1.
Overall, Vanguard Long-Term Investment-Grade Income Admiral ( VWETX ) 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.
Don't stop here for your research on Investment Grade Bond - Long 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 VWETX to its peers 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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