Any investors hoping to find an Allocation Balanced fund could think about starting with Vanguard LifeStrategy Moderate Growth Fund (VSMGX). VSMGX possesses a Zacks Mutual Fund Rank of 2 (Buy), which is based on nine 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.
History of Fund/Manager
VSMGX finds itself in the Vanguard Group family, based out of Malvern, PA. Vanguard LifeStrategy Moderate Growth Fund made its debut in September of 1994, and since then, VSMGX has accumulated about $21.63 billion in assets, per the most up-to-date date available. A team of investment professionals is the fund’s current manager.
Investors naturally seek funds with strong performance. This fund carries a 5-year annualized total return of 9.47%, 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 10.04%, 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. VSMGX’s standard deviation over the past three years is 11.48% compared to the category average of 13.09%. The standard deviation of the fund over the past 5 years is 9.22% compared to the category average of 10.59%. 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 0.58, so it is likely going to be less 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. VSMGX’s 5-year performance has produced a negative alpha of -0.8, which means 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, VSMGX is a no load fund. It has an expense ratio of 0.13% compared to the category average of 0.89%. So, VSMGX is actually cheaper than its peers from a cost perspective.
While the minimum initial investment for the product is $3,000, investors should also note that each subsequent investment needs to be at least $1.
Overall, Vanguard LifeStrategy Moderate Growth Fund ( VSMGX ) 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 great potential choice for investors right now.
This could just be the start of your research on VSMGXin the Allocation Balanced category. Consider going to www.zacks.com/funds/mutual-funds for additional information about this fund, and all the others that we rank as well 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.