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Is Vanguard Emerging Markets Select Stock Investor (VMMSX) a Strong Mutual Fund Pick Right Now?

Having trouble finding a Non US - Equity fund? Vanguard Emerging Markets Select Stock Investor (VMMSX) is a potential starting point. VMMSX holds a Zacks Mutual Fund Rank of 2 (Buy), which is based on nine forecasting factors like size, cost, and past performance.

Objective

We classify VMMSX in the Non US - Equity category, which is an area rife with potential choices. Investing in companies outside the United States is how Non US - Equity funds set themselves apart, since global funds tend to keep a good portion of their portfolio stateside. Many of these funds like to allocate across emerging and developed markets, and will often focus on all cap levels.

History of Fund/Manager

VMMSX is a part of the Vanguard Group family of funds, a company based out of Malvern, PA. Vanguard Emerging Markets Select Stock Investor made its debut in June of 2011, and since then, VMMSX has accumulated about $1.06 billion in assets, per the most up-to-date date available. The fund's current manager is a team of investment professionals.

Performance

Investors naturally seek funds with strong performance. VMMSX has a 5-year annualized total return of 14.77% and is in the middle 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 11.45%, which places it in the middle 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. VMMSX's standard deviation over the past three years is 21.25% compared to the category average of 20.3%. The standard deviation of the fund over the past 5 years is 17.84% compared to the category average of 17.16%. This makes the fund more volatile than its peers over the past half-decade.

Risk Factors

With a 5-year beta of 0.9, the fund is likely to be less 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 -0.01, managers in this portfolio find it difficult to pick securities that generate better-than-benchmark returns.

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, VMMSX is a no load fund. It has an expense ratio of 0.85% compared to the category average of 1.18%. From a cost perspective, VMMSX 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.

Bottom Line

Overall, Vanguard Emerging Markets Select Stock Investor ( VMMSX ) has a high Zacks Mutual Fund rank, and in conjunction with its comparatively similar performance, average downside risk, and lower fees, Vanguard Emerging Markets Select Stock Investor ( VMMSX ) looks like a good potential choice for investors right now.

For additional information on the Non US - Equity area of the mutual fund world, make sure to check out www.zacks.com/funds/mutual-funds. There, you can see more about the ranking process, and dive even deeper into VMMSX too 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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