Is Vanguard Target Retirement 2035 Fund (VTTHX) a Strong Mutual Fund Pick Right Now?

There are plenty of choices in the Mutual Fund Equity Report category, but where should you start your research? Well, one fund that might be worth investigating is Vanguard Target Retirement 2035 Fund (VTTHX). While this fund is not tracked by the Zacks Mutual Fund Rank, we were able to examine other factors like performance, volatility, and cost.

History of Fund/Manager

VTTHX finds itself in the Vanguard Group family, based out of Malvern, PA. Vanguard Target Retirement 2035 Fund made its debut in October of 2003, and since then, VTTHX has accumulated about $38.49 billion in assets, per the most up-to-date date available. The fund is currently managed by William Coleman who has been in charge of the fund since February of 2013.

Performance

Investors naturally seek funds with strong performance. VTTHX has a 5-year annualized total return of 12.46% and it sits in the top 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 14.74%, which places it in the top 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 14.5%, the standard deviation of VTTHX over the past three years is 13.7%. The fund's standard deviation over the past 5 years is 11.48% compared to the category average of 11.66%. This makes the fund less volatile than its peers over the past half-decade.

Risk Factors

The fund has a 5-year beta of 0.73, so investors should note that 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. VTTHX's 5-year performance has produced a negative alpha of -1.36, which means managers in this portfolio find it difficult to pick securities that generate better-than-benchmark returns.

Expenses

As competition heats up in the mutual fund market, costs become increasingly important. Compared to its otherwise identical counterpart, a low-cost product will be an outperformer, all other things being equal. Thus, taking a closer look at cost-related metrics is vital for investors. In terms of fees, VTTHX is a no load fund. It has an expense ratio of 0.14% compared to the category average of 0.49%. VTTHX is actually cheaper than its peers when you consider factors like cost.

Investors should also note that the minimum initial investment for the product is $1,000 and that each subsequent investment needs to be at $1.

Bottom Line

For additional information on this product, or to compare it to other mutual funds in the Mutual Fund Equity Report, 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.