Is Vanguard Growth Index Institutional (VIGIX) a Strong Mutual Fund Pick Right Now?

·4-min read

There are plenty of choices in the Large Cap Growth category, but where should you start your research? Well, one fund that might be worth investigating is Vanguard Growth Index Institutional (VIGIX). While this fund is not tracked by the Zacks Mutual Fund Rank, we were able to examine other factors like performance, volatility, and cost.

Objective

We classify VIGIX in the Large Cap Growth category, an area rife with potential choices. Large Cap Growth funds invest in many large U.S. companies that are expected to grow much faster compared to other large-cap stocks. To be considered large-cap, companies must have a market cap over $10 billion.

History of Fund/Manager

Vanguard Group is based in Malvern, PA, and is the manager of VIGIX. Since Vanguard Growth Index Institutional made its debut in May of 1998, VIGIX has garnered more than $23.19 billion in assets. The fund's current manager, Gerard O'Reilly, has been in charge of the fund since November of 2000.

Performance

Investors naturally seek funds with strong performance. This fund in particular has delivered a 5-year annualized total return of 21.47%, 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 23.4%, 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. The standard deviation of VIGIX over the past three years is 19.89% compared to the category average of 15.57%. The fund's standard deviation over the past 5 years is 16.21% compared to the category average of 12.93%. This makes the fund more volatile than its peers over the past half-decade.

Risk Factors

The fund has a 5-year beta of 1.03, so investors should note that it is hypothetically as volatile as the market at large. Another factor to consider is alpha, as it reflects a portfolio's performance on a risk-adjusted basis relative to a benchmark-in this case, the S&P 500. VIGIX has generated a positive alpha over the past five years of 3.37, demonstrating that managers in this portfolio are skilled in picking securities that generate better-than-benchmark returns.

Holdings

Investigating the equity holdings of a mutual fund is also a valuable exercise. This can show us how the manager is applying their stated methodology, as well as if there are any inherent biases in their approach. For this particular fund, the focus is largely on equities that are traded in the United States.

Currently, this mutual fund is holding 84.43% stock in stocks, with an average market capitalization of $410.01 billion. The fund has the heaviest exposure to the following market sectors:

  1. Technology

  2. Retail Trade

Turnover is about 6%, so those in charge of the fund make fewer trades than the average comparable fund.

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, VIGIX is a no load fund. It has an expense ratio of 0.04% compared to the category average of 1.02%. Looking at the fund from a cost perspective, VIGIX is actually cheaper than its peers.

Investors should also note that the minimum initial investment for the product is $5 million and that each subsequent investment needs to be at $1.

Bottom Line

Want even more information about VIGIX? Then go over to Zacks.com and check out our mutual fund comparison tool, and all of the other great features that we have to help you with your mutual fund analysis 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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