On the lookout for an Allocation Balanced fund? Starting with Vanguard Balanced Index Admiral (VBIAX) is one possibility. VBIAX has a Zacks Mutual Fund Rank of 1 (Strong Buy), which is based on nine forecasting factors like size, cost, and past performance.
The world of Zacks' Allocation Balanced funds is an area filled with options, such as VBIAX. These funds like to invest in a variety of asset types, finding a balance between stocks, bonds, cash, and sometimes even precious metals and commodities; they are mostly categorized by their respective asset allocation. For investors, Allocation Balanced funds can provide an entry point into diversified mutual funds, and present core holding options for a portfolio of funds.
History of Fund/Manager
Vanguard Group is based in Malvern, PA, and is the manager of VBIAX. The Vanguard Balanced Index Admiral made its debut in November of 2000 and VBIAX has managed to accumulate roughly $25.42 billion in assets, as of the most recently available information. A team of investment professionals is the fund's current manager.
Of course, investors look for strong performance in funds. VBIAX has a 5-year annualized total return of 7.29% and is in the top third among its category peers. Investors who prefer analyzing shorter time frames should look at its 3-year annualized total return of 9.34%, 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. Over the past three years, VBIAX's standard deviation comes in at 7.06%, compared to the category average of 8.45%. Over the past 5 years, the standard deviation of the fund is 6.98% compared to the category average of 8.45%. This makes the fund less volatile than its peers over the past half-decade.
It's always important to be aware of the downsides to any future investment, so one should not discount the risks that come with this segment. In the most recent bear market, VBIAX lost 32.49% and outperformed its peer group by 3.91%. These results could imply that the fund is a better choice than its peers during a sliding market environment.
Nevertheless, investors should also note that the fund has a 5-year beta of 0.61, which means it is hypothetically less volatile than the market at large. 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. Over the past 5 years, the fund has a positive alpha of 0.31. This means that managers in this portfolio are skilled in picking 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, VBIAX is a no load fund. It has an expense ratio of 0.07% compared to the category average of 0.88%. Looking at the fund from a cost perspective, VBIAX is actually cheaper than its peers.
This fund requires a minimum initial investment of $3,000, and each subsequent investment should be at least $1.
Overall, Vanguard Balanced Index Admiral ( VBIAX ) has a high Zacks Mutual Fund rank, strong performance, average downside risk, and lower fees compared to its peers.
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