Investors looking for an index fund may want to consider looking to the Vanguard Total Bond Market Index Institutional (VBTIX). While this fund is not tracked by the Zacks mutual fund rankings, we were able to look at other factors such as performance, volatility, and cost.
Fund / manager history
VBTIX is part of the Vanguard Group family of funds, a company based in Malvern, PA. The Vanguard Total Bond Market Index Institutional debuted in September 1995 and VBTIX has managed to accumulate approximately $ 50.66 billion in assets, according to the latest information available. Joshua Barrickman is the current fund manager and has held this position since February 2013.
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 is in the bottom third of its category peers. But if you’re looking for a shorter timeframe, it’s also worth looking at its 3-year annualized total return of 5.14%, which puts it in the bottom third over that time frame.
When looking at the performance of a fund, it is also important to note the standard deviation of 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 fund’s standard deviation 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.
Investors should note that the fund has a beta of 1.04 over 5 years, so it will likely be more volatile than the market as a whole. Alpha is an additional metric to consider, since it represents the performance of a portfolio on a risk-adjusted basis relative to a benchmark, which in this case is the S&P 500. The performance of VBTIX over 5 years produced a negative alpha of -0.1, which means that the managers of this portfolio have difficulty selecting stocks that generate returns above the benchmark.
The costs are increasingly important for investing in mutual funds, and particularly as competition intensifies in this market. And all else being equal, a lower-cost product will outperform its otherwise identical counterpart, so it’s critical for investors to take a closer look at these metrics. 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 less expensive than its peers when you consider factors like cost.
This fund requires a minimum initial investment of $ 5 million, and each subsequent investment must be at least $ 1.
For more information on the Index area of the mutual fund world, be sure to visit www.zacks.com/funds/mutual-funds. There you can learn more about the ranking process and dive even deeper into VBTIX 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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