Is Vanguard Total Bond Market Index Institutional (VBTIX) a Strong Mutual Fund Pick Right Now?
Investors in search of an Index fund might want to consider looking at Vanguard Total Bond Market Index Institutional (VBTIX). While this fund is not tracked by the Zacks Mutual Fund Rank, we were able to examine other factors like performance, volatility, and cost.
History of Fund/Manager
VBTIX is a part of the Vanguard Group family of funds, a company based out of Malvern, PA. The Vanguard Total Bond Market Index Institutional made its debut in September of 1995 and VBTIX has managed to accumulate roughly $50.66 billion in assets, as of the most recently available information. Joshua Barrickman is the fund's current manager and has held that role since February of 2013.
Performance
Obviously, what investors are looking for in these funds is strong performance relative to their peers. VBTIX has a 5-year annualized total return of 3.24% 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 5.14%, 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. The standard deviation of VBTIX over the past three years is 3.56% compared to the category average of 15.33%. The standard deviation of the fund over the past 5 years is 3.42% compared to the category average of 12.72%. This makes the fund less volatile than its peers over the past half-decade.
Risk Factors
Investors should note that the fund has a 5-year beta of 1.04, so it is likely going to be more 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. VBTIX's 5-year performance has produced a negative alpha of -0.1, which means 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, VBTIX is a no load fund. It has an expense ratio of 0.04% compared to the category average of 0.79%. VBTIX is actually cheaper than its peers when you consider factors like cost.
This fund requires a minimum initial investment of $5 million, and each subsequent investment should be at least $1.
Bottom Line
For additional information on the Index 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 VBTIX too for additional information. Zacks provides a full suite of tools to help you analyze your portfolio - both funds and stocks - in the most efficient way possible.
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