Is Vanguard LifeStrategy Moderate Growth Fund (VSMGX) a Strong Mutual Fund Pick Right Now?

Allocation Balanced fund seekers should consider taking a look at Vanguard LifeStrategy Moderate Growth Fund (VSMGX). VSMGX bears a Zacks Mutual Fund Rank of 2 (Buy), which is based on various forecasting factors like size, cost, and past performance.

The world of Zacks’ Allocation Balanced funds is an area filled with options, such as VSMGX. These funds like to invest in a variety of asset types, finding a balance between stocks, bonds, cash, and sometimes even precious metals and commodities; they are mostly categorized by their respective asset allocation. For investors, Allocation Balanced funds can provide an entry point into diversified mutual funds, and present core holding options for a portfolio of funds.

Vanguard Group is responsible for VSMGX, and the company is based out of Malvern, PA. The Vanguard LifeStrategy Moderate Growth Fund made its debut in September of 1994 and VSMGX has managed to accumulate roughly $20.90 billion in assets, as of the most recently available information. A team of investment professionals is the fund’s current manager.

Of course, investors look for strong performance in funds. This fund has delivered a 5-year annualized total return of 8.72%, and is 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 3.9%, which places it in the bottom 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. Compared to the category average of 12.09%, the standard deviation of VSMGX over the past three years is 12.09%. The standard deviation of the fund over the past 5 years is 11.33% compared to the category average of 12.81%. This makes the fund less volatile than its peers over the past half-decade.

Investors should not forget about beta, an important way to measure a mutual fund’s risk compared to the market as a whole. VSMGX has a 5-year beta of 0.64, which means it is likely to be less volatile than the market average. Another factor to consider is alpha, as it reflects a portfolio’s performance on a risk-adjusted basis relative to a benchmark-in this case, the S&P 500. The fund has produced a negative alpha over the past 5 years of -3.7, which shows that managers in this portfolio find it difficult to pick securities that generate better-than-benchmark returns.