Is Vanguard US Growth Admiral (VWUAX) a Strong Mutual Fund Pick Right Now?
Having trouble finding a Large Cap Growth fund? Vanguard US Growth Admiral (VWUAX) is a potential starting point. VWUAX carries a Zacks Mutual Fund Rank of 1 (Strong Buy), which is based on various forecasting factors like size, cost, and past performance.
VWUAX 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.
Vanguard Group is based in Malvern, PA, and is the manager of VWUAX. The Vanguard US Growth Admiral made its debut in August of 2001 and VWUAX has managed to accumulate roughly $32.98 billion in assets, as of 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 in particular has delivered a 5-year annualized total return of 6.15%, 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 19.12%, which places it in the middle 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 13.01%, the standard deviation of VWUAX over the past three years is 17.29%. The fund’s standard deviation over the past 5 years is 21.36% compared to the category average of 15.84%. This makes the fund more 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. VWUAX has a 5-year beta of 1.27, which means it is likely to be more 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. VWUAX has generated a negative alpha over the past five years of -6.6, demonstrating that managers in this portfolio find it difficult to pick securities that generate better-than-benchmark returns.
For investors, taking a closer look at cost-related metrics is key, since costs are increasingly important for mutual fund investing. Competition is heating up in this space, and a lower cost product will likely outperform its otherwise identical counterpart, all things being equal. In terms of fees, VWUAX is a no load fund. It has an expense ratio of 0.25% compared to the category average of 0.93%. Looking at the fund from a cost perspective, VWUAX is actually cheaper than its peers.
While the minimum initial investment for the product is $50,000, investors should also note that each subsequent investment needs to be at least $1.
Fees charged by investment advisors have not been taken into consideration. Returns would be less if those were included.
Overall, even with its comparatively weak performance, worse downside risk, and lower fees, Vanguard US Growth Admiral ( VWUAX ) has a high Zacks Mutual Fund rank, and therefore looks a great potential choice for investors right now.
For additional information on this product, or to compare it to other mutual funds in the Large Cap Growth, make sure to go to www.zacks.com/funds/mutual-funds for additional information. And don’t forget, Zacks has all of your needs covered on the equity side too! Make sure to check out Zacks.com for more information on our screening capabilities, Rank, and all our articles as well.
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This article originally published on Zacks Investment Research (zacks.com).