On the lookout for a Large Cap Value fund? Starting with Vanguard Windsor-II Admiral (VWNAX) is one possibility. VWNAX holds a Zacks Mutual Fund Rank of 1 (Strong Buy), which is based on various forecasting factors like size, cost, and past performance.
VWNAX is classified in the Large Cap Value segment by Zacks, which is an area full of possibilities. Investors interested in a stable income stream find these mutual funds very appealing because they have a unique investing strategy. Large Cap Value funds invest in stocks with a market capitalization of $10 billion or more, but whose share prices do not reflect their intrinsic value. This tactic often leads to low P/E ratios and high dividend yields; however, these funds’ high growth opportunities are often slowed, as large-cap securities are generally in stable industries with low to moderate growth prospects.
VWNAX finds itself in the Vanguard Group family, based out of Malvern, PA. Vanguard Windsor-II Admiral debuted in May of 2001. Since then, VWNAX has accumulated assets of about $51.83 billion, according to the most recently available information. A team of investment professionals is the fund’s current manager.
Obviously, what investors are looking for in these funds is strong performance relative to their peers. This fund has delivered a 5-year annualized total return of 12.98%, and it sits in the top 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 17.98%, which places it in the top third during this time-frame.
It is important to note that the product’s returns may not reflect all its expenses. Any fees not reflected would lower the returns. Total returns do not reflect the fund’s [%] sale charge. If sales charges were included, total returns would have been lower.
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 VWNAX over the past three years is 11.29% compared to the category average of 11.87%. Looking at the past 5 years, the fund’s standard deviation is 14.43% compared to the category average of 13.58%. This makes the fund more volatile than its peers over the past half-decade.
With a 5-year beta of 0.91, the fund is likely to be less volatile than the market average. 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. With a negative alpha of -0.37, managers in this portfolio find it difficult to pick securities that generate better-than-benchmark returns.
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 primarily on equities that are traded in the United States.
Right now, 87.93% of this mutual fund’s holdings are stocks, with an average market capitalization of $435.69 billion. The fund has the heaviest exposure to the following market sectors:
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Technology
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Finance
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Industrial Cyclical
With turnover at about 22%, this fund makes fewer trades than the average comparable fund.
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, VWNAX is a no load fund and it has an expense ratio of 0.25%.
This fund requires a minimum initial investment of $50,000, and each subsequent investment should be at least $1.
Fees charged by investment advisors have not been taken into consideration. Returns would be less if those were included.
This puts this fund from Vanguard Group in the top 20% of all mutual funds we have a rank on right now. As a result, this is likely an excellent choice for investors seeking an option in the Large Cap Value category.
This could just be the start of your research on VWNAX in the Large Cap Value category. Consider going to www.zacks.com/funds/mutual-funds for additional information about this fund, and all the others that we rank as well 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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This article originally published on Zacks Investment Research (zacks.com).