Is Vanguard Growth & Income Admiral (VGIAX) a Strong Mutual Fund Pick Right Now?

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 Growth & Income Admiral (VGIAX). VGIAX carries a Zacks Mutual Fund Rank of 2 (Buy), which is based on nine forecasting factors like size, cost, and past performance.

Objective

We note that VGIAX is a Large Cap Blend option, an area loaded with different options. More often than not, Large Cap Blend mutual funds invest in companies with a market cap of over $10 billion. Buying stakes in bigger companies offer these funds more stability, and are well-suited for investors with a " buy and hold " mindset. Additionally, blended funds mix large, more established firms into their portfolios, giving investors exposure to value and growth opportunities.

History of Fund/Manager

Vanguard Group is based in Malvern, PA, and is the manager of VGIAX. Since Vanguard Growth & Income Admiral made its debut in May of 2001, VGIAX has garnered more than $8.43 billion in assets. A team of investment professionals is the fund's current manager.

Performance

Of course, investors look for strong performance in funds. This fund has delivered a 5-year annualized total return of 10.52%, and is 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 13.48%, 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 10.66%, the standard deviation of VGIAX over the past three years is 12.38%. The standard deviation of the fund over the past 5 years is 12% compared to the category average of 10.77%. This makes the fund more volatile than its peers over the past half-decade.

Risk Factors

Investors should always remember the downsides to a potential investment, and this segment carries some risks one should be aware of. In the most recent bear market, VGIAX lost 51.88% and underperformed its peer group by 3%. These results could imply that the fund is a worse choice than its peers during a sliding market environment.

Investors should note that the fund has a 5-year beta of 0.99, so it is likely going to be as volatile as 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. With a negative alpha of -0.1, managers in this portfolio find it difficult to pick securities that generate better-than-benchmark returns.

Holdings

Exploring 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 mostly on equities that are traded in the United States.

The mutual fund currently has 85.58% of its holdings in stocks, and these companies have an average market capitalization of $225.66 billion. The fund has the heaviest exposure to the following market sectors:

1. Technology

2. Finance

Turnover is 146%, which means this fund makes more traders than comparable funds in a given year.

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, VGIAX is a no load fund. It has an expense ratio of 0.23% compared to the category average of 0.96%. VGIAX is actually cheaper than its peers when you consider factors like cost.

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.

Bottom Line

Overall, Vanguard Growth & Income Admiral ( VGIAX ) has a high Zacks Mutual Fund rank, and in conjunction with its comparatively strong performance, average downside risk, and lower fees, this fund looks like a good potential choice for investors right now.

For additional information on the Large Cap Blend 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 VGIAX too 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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