There are plenty of choices in the Large Cap Blend category, but where should you start your research? Well, one fund that might be worth investigating is Vanguard Dividend Growth Fund (VDIGX). VDIGX bears a Zacks Mutual Fund Rank of 1 (Strong Buy), which is based on nine forecasting factors like size, cost, and past performance.
Objective
VDIGX is classified in the Large Cap Blend segment by Zacks, which is an area full of potential. Targeting companies with market caps of more than $10 billion, Large Cap Blend mutual funds offer a stable investment choice; these funds are perfect for investors with a " buy and hold " mindset. Since blended funds mix large, more established firms into their portfolios, investors are exposed to both value and growth opportunities.
History of Fund/Manager
Vanguard Group is based in Malvern, PA, and is the manager of VDIGX. Since Vanguard Dividend Growth Fund made its debut in May of 1992, VDIGX has garnered more than $45.10 billion in assets. Donald J. Kilbride is the fund's current manager and has held that role since February of 2006.
Performance
Investors naturally seek funds with strong performance. This fund carries a 5-year annualized total return of 13.08%, and is in the bottom third among its category peers. Investors who prefer analyzing shorter time frames should look at its 3-year annualized total return of 10.28%, 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. VDIGX's standard deviation over the past three years is 15.92% compared to the category average of 19.23%. The fund's standard deviation over the past 5 years is 12.99% compared to the category average of 15.67%. This makes the fund less volatile than its peers over the past half-decade.
Risk Factors
The fund has a 5-year beta of 0.81, so investors should note that it is hypothetically less volatile than the market at large. 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. VDIGX's 5-year performance has produced a negative alpha of -0.18, which means managers in this portfolio find it difficult to pick securities that generate better-than-benchmark returns.
Expenses
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, VDIGX is a no load fund. It has an expense ratio of 0.26% compared to the category average of 0.96%. VDIGX is actually cheaper than its peers when you consider factors like cost.
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.
Bottom Line
Overall, Vanguard Dividend Growth Fund ( VDIGX ) has a high Zacks Mutual Fund rank, and in conjunction with its comparatively weak performance, average downside risk, and lower fees, this fund looks like 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 Blend, make sure to go to www.zacks.com/funds/mutual-funds 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.
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The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.
