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Is Vanguard Growth Index Investor (VIGRX) a Strong Mutual Fund Pick Right Now?

Mutual Fund Report for VIGRX

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This story originally appeared on Zacks

Any investors who are searching for Large Cap Growth funds should take a look at Vanguard Growth Index Investor (VIGRX). The fund does not have a Zacks Mutual Fund Rank, though we have been able to explore other metrics like performance, volatility, and cost.

- Zacks

Objective

VIGRX is classified in the Large Cap Growth segment by Zacks, an area full of possibilities. Companies are usually considered to be large-cap if their stock market valuation is more than $10 billion. Large Cap Growth mutual funds invest in many large U.S. firms that are projected to grow at a faster rate than their large-cap peers.

History of Fund/Manager

Vanguard Group is responsible for VIGRX, and the company is based out of Malvern, PA. Vanguard Growth Index Investor made its debut in November of 1992, and since then, VIGRX has accumulated about $754.98 million in assets, per the most up-to-date date available. The fund's current manager, Gerard O'Reilly, has been in charge of the fund since November of 2000.

Performance

Of course, investors look for strong performance in funds. VIGRX has a 5-year annualized total return of 22.54% 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 25.47%, 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. Compared to the category average of 15.56%, the standard deviation of VIGRX over the past three years is 20.04%. The fund's standard deviation over the past 5 years is 16.25% 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. 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 positive alpha of 4.12, managers in this portfolio are skilled in picking securities that generate better-than-benchmark returns.

Holdings

Examining 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 principally on equities that are traded in the United States.

The mutual fund currently has 78.28% of its holdings in stocks, which have an average market capitalization of $439.95 billion. The fund has the heaviest exposure to the following market sectors:

  1. Technology
  2. Retail Trade
Turnover is 6%, which means, on average, the fund makes fewer trades than the average comparable fund.

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, VIGRX is a no load fund. It has an expense ratio of 0.17% compared to the category average of 1.02%. From a cost perspective, VIGRX is actually cheaper than its peers.

Investors should also note that the minimum initial investment for the product is $0 and that each subsequent investment has no minimum amount.

Bottom Line

Don't stop here for your research on Large Cap Growth funds. We also have plenty more on our site in order to help you find the best possible fund for your portfolio. Make sure to check out www.zacks.com/funds/mutual-funds for more information about the world of funds, and feel free to compare VIGRX to its peers as well for additional information. If you are more of a stock investor, make sure to also check out our Zacks Rank, and our full suite of tools we have available for novice and professional investors alike.



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