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Is Vanguard Managed Payout Investor (VPGDX) a Strong Mutual Fund Pick Right Now?

Having trouble finding an Allocation Balanced fund? Well, Vanguard Managed Payout Investor (VPGDX) would not be a good potential starting point right now. VPGDX has a Zacks Mutual Fund Rank of 4 (Sell), which is based on nine forecasting factors like size, cost, and past performance.

Objective

VPGDX is one of many Zacks' Allocation Balanced mutual funds to pick from. Allocation Balanced funds seek to invest in a balance of asset types, like stocks, bonds, and cash, though including precious metals or commodities is not unusual; these funds are mostly categorized by their respective asset allocation. Investors utilize Allocation Balanced funds as a way to get a good start with diversified mutual funds, as well as for core holdings in a portfolio of funds.

History of Fund/Manager

VPGDX is a part of the Vanguard Group family of funds, a company based out of Malvern, PA. Since Vanguard Managed Payout Investor made its debut in April of 2008, VPGDX has garnered more than $1.30 billion in assets. Anatoly Shtekhman is the fund's current manager and has held that role since April of 2016.

Performance

Investors naturally seek funds with strong performance. This fund has delivered a 5-year annualized total return of 7.68%, and it sits in the bottom 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 6.84%, which places it in the bottom 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, VPGDX's standard deviation comes in at 11.43%, compared to the category average of 12.73%. The standard deviation of the fund over the past 5 years is 9.16% compared to the category average of 10.46%. This makes the fund less volatile than its peers over the past half-decade.

Risk Factors

The fund has a 5-year beta of 0.57, so investors should note that it is hypothetically less volatile than the market at large. Because alpha represents a portfolio's performance on a risk-adjusted basis relative to a benchmark, which is the S&P 500 in this case, one should pay attention to this metric as well. Over the past 5 years, the fund has a negative alpha of -1.96. This means that managers in this portfolio find it difficult to pick securities that generate better-than-benchmark returns.

Expenses

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, VPGDX is a no load fund. It has an expense ratio of 0.28% compared to the category average of 0.89%. So, VPGDX is actually cheaper than its peers from a cost perspective.

Investors should also note that the minimum initial investment for the product is $25,000 and that each subsequent investment needs to be at $1.

Bottom Line

Overall, Vanguard Managed Payout Investor ( VPGDX ) has a low Zacks Mutual Fund rank, and in conjunction with its comparatively weak performance, average downside risk, and lower fees, Vanguard Managed Payout Investor ( VPGDX ) looks like a somewhat weak choice for investors right now.

For additional information on this product, or to compare it to other mutual funds in the Allocation Balanced, make sure to go to www.zacks.com/funds/mutual-funds for additional information. For analysis of the rest of your portfolio, make sure to visit Zacks.com for our full suite of tools which will help you investigate all of your stocks and funds in one place.


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