If investors are looking at the Large Cap Value fund category, Vanguard Equity Income Admiral (VEIRX) could be a potential option. VEIRX bears a Zacks Mutual Fund Rank of 1 (Strong Buy), which is based on nine forecasting factors like size, cost, and past performance.
VEIRX is one of many Large Cap Value mutual funds to choose from. These funds invest in equities with a market capitalization of $10 billion or more, but whose share prices do not reflect their intrinsic value. This strategy can often produce low P/E ratios and high dividend yields; growth levels; however, growth levels are oftentimes cut back. These funds’high growth opportunities are slowed even more since large-cap stocks are usually in more stable industries with low to moderate growth prospects. Thus, investors interested in a stable income stream fund Large Cap Value funds very appealing.
History of Fund/Manager
Vanguard Group is based in Malvern, PA, and is the manager of VEIRX. Vanguard Equity Income Admiral debuted in August of 2001. Since then, VEIRX has accumulated assets of about $43.55 billion, according to the most recently available information. The fund is currently managed by a team of investment professionals.
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 11.99%, and it sits in the middle 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 11.41%, which places it in the middle 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 17.67%, the standard deviation of VEIRX over the past three years is 17.54%. Looking at the past 5 years, the fund’s standard deviation is 14.26% compared to the category average of 14.48%. This makes the fund less volatile than its peers over the past half-decade.
Investors should note that the fund has a 5-year beta of 0.9, which means it is hypothetically less volatile than the market at large. 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. VEIRX has generated a negative alpha over the past five years of -3.19, demonstrating that managers in this portfolio find it difficult to pick securities that generate better-than-benchmark returns.
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.
As of the last filing date, the mutual fund has 89.7% of its assets in stocks, and these companies have an average market capitalization of $154.24 billion. The fund has the heaviest exposure to the following market sectors:
- Industrial Cyclical
Turnover is 38%, which means, on average, the fund makes fewer trades than the average comparable fund.
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, VEIRX is a no load fund. It has an expense ratio of 0.19% compared to the category average of 1%. So, VEIRX is actually cheaper than its peers from a cost perspective.
Investors need to be aware that with this product, the minimum initial investment is $50,000; each subsequent investment needs to be at least $1.
Overall, Vanguard Equity Income Admiral ( VEIRX ) has a high Zacks Mutual Fund rank, and in conjunction with its comparatively similar performance, average downside risk, and lower fees, this fund looks like a good potential choice for investors right now.
Your research on the Large Cap Value segment doesn’t have to stop here. You can check out all the great mutual fund tools we have to offer by going to www.zacks.com/funds/mutual-funds to see the additional features we offer as well for additional information. Want to learn even more? We have a full suite of tools on stocks that you can use to find the best choices for your portfolio too, no matter what kind of investor you are.