Government Mortgage - Intermediate fund seekers should consider taking a look at Vanguard GNMA Investor (VFIIX). VFIIX bears a Zacks Mutual Fund Rank of 2 (Buy), which is based on various forecasting factors like size, cost, and past performance.
Objective
We classify VFIIX in the Government Mortgage - Intermediate category, an area full of potential choices. Government Mortgage - Intermediate funds focus on the mortgage-backed securities (MBS) market, which packages mortgages together and then sells off the pooled securities as a MBS. Honing in on MBS'that have at least three years to maturity but less than 10, this fund category presents a medium risk and yield profile.
History of Fund/Manager
VFIIX is a part of the Vanguard Group family of funds, a company based out of Malvern, PA. Since Vanguard GNMA Investor made its debut in June of 1980, VFIIX has garnered more than $4.97 billion in assets. The fund's current manager, Brian Conroy, has been in charge of the fund since May of 2019.
Performance
Investors naturally seek funds with strong performance. This fund carries a 5-year annualized total return of -0.3%, and is in the top third among its category peers. If you're interested in shorter time frames, do not dismiss looking at the fund's 3 -year annualized total return of -0.29%, which places it in the top 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. VFIIX's standard deviation over the past three years is 8.09% compared to the category average of 10.71%. The fund's standard deviation over the past 5 years is 6.33% compared to the category average of 10.64%. This makes the fund less volatile than its peers over the past half-decade.
With a beta of 1.01, this fund is more volatile than a broad market index of fixed income securities. Taking this into account, VFIIX has a positive alpha of 0.08, which measures performance on a risk-adjusted basis.
Expenses
Costs are increasingly important for mutual fund investing, and particularly as competition heats up in this market. And all things being equal, a lower cost product will outperform its otherwise identical counterpart, so taking a closer look at these metrics is key for investors. In terms of fees, VFIIX is a no load fund. It has an expense ratio of 0.21% compared to the category average of 0.76%. From a cost perspective, VFIIX is actually cheaper than its peers.
Investors need to be aware that with this product, the minimum initial investment is $3,000; each subsequent investment needs to be at least $1.
Fees charged by investment advisors have not been taken into considiration. Returns would be less if those were included.
Bottom Line
Overall, Vanguard GNMA Investor ( VFIIX ) has a high Zacks Mutual Fund rank, and in conjunction with its comparatively strong performance, average downside risk, and lower fees, Vanguard GNMA Investor ( VFIIX ) looks like a good potential choice for investors right now.
For additional information on the Government Mortgage - Intermediate area of the mutual fund world, make sure to check out www.zacks.com/funds/mutual-funds. There, you can see more about the ranking process, and dive even deeper into VFIIX too for additional information. For analysis of the rest of your portfolio, make sure to visit Zacks.com for our full suite of tools which will help you investigate all of your stocks and funds in one place.
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This article originally published on Zacks Investment Research (zacks.com).
The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.
