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Is Vanguard Windsor-II Investor (VWNFX) a Strong Mutual Fund Pick Right Now?

Mutual Fund Report for VWNFX

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This story originally appeared on Zacks

Any investors hoping to find a Mutual Fund Equity Report fund could think about starting with Vanguard Windsor-II Investor (VWNFX). VWNFX possesses a Zacks Mutual Fund Rank of 1 (Strong Buy), which is based on nine forecasting factors like size, cost, and past performance.

- Zacks

History of Fund/Manager

Vanguard Group is responsible for VWNFX, and the company is based out of Malvern, PA. Since Vanguard Windsor-II Investor made its debut in June of 1985, VWNFX has garnered more than $13.17 billion in assets. The fund's current manager is a team of investment professionals.

Performance

Obviously, what investors are looking for in these funds is strong performance relative to their peers. VWNFX has a 5-year annualized total return of 14.48% and it sits in the top third among its category peers. Investors who prefer analyzing shorter time frames should look at its 3-year annualized total return of 17.98%, 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. The standard deviation of VWNFX over the past three years is 20.26% compared to the category average of 17.57%. Looking at the past 5 years, the fund's standard deviation is 16.63% compared to the category average of 14.6%. This makes the fund more volatile than its peers over the past half-decade.

Risk Factors

Investors should note that the fund has a 5-year beta of 1.05, which means it is hypothetically 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. The fund has produced a negative alpha over the past 5 years of -3.51, which shows that managers in this portfolio find it difficult to pick 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 mostly on equities that are traded in the United States.

Right now, 84.56% of this mutual fund's holdings are stocks, with an average market capitalization of $373.42 billion. The fund has the heaviest exposure to the following market sectors:

  1. Technology
  2. Finance

With turnover at about 22%, this fund makes fewer trades than comparable funds.

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, VWNFX is a no load fund. It has an expense ratio of 0.34% compared to the category average of 1%. From a cost perspective, VWNFX is actually cheaper than its peers.

Investors need to be aware that with this product, the minimum initial investment is $3,000; each subsequent investment needs to be at least $1.

Bottom Line

Overall, Vanguard Windsor-II Investor ( VWNFX ) has a high Zacks Mutual Fund rank, and in conjunction with its comparatively strong performance, average downside risk, and lower fees, this fund looks like a good potential choice for investors right now.

For additional information on the Mutual Fund Equity Report 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 VWNFX 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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