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

If investors are looking at the Large Cap Blend fund category, Vanguard Growth & Income Admiral (VGIAX) could be a potential option. VGIAX carries a Zacks Mutual Fund Rank of 1 (Strong Buy), which is based on nine forecasting factors like size, cost, and past performance.

Objective

VGIAX is part of the Large Cap Blend section, an area that boasts an array of many possible options. Large Cap Blend mutual funds most often invest in firms with a market capitalization of $10 billion or more. By investing in bigger companies, these funds offer more stability, and are often well-suited for investors with a " buy and hold " mindset. Blended funds mix large, established companies into their holdings, which gives investors exposure to both value and growth at the same time.

History of Fund/Manager

VGIAX finds itself in the Vanguard Group family, based out of Malvern, PA. Vanguard Growth & Income Admiral made its debut in May of 2001, and since then, VGIAX has accumulated about $8.97 billion in assets, per the most up-to-date date available. The fund is currently managed by a team of investment professionals.

Performance

Obviously, what investors are looking for in these funds is strong performance relative to their peers. This fund carries a 5-year annualized total return of 11.32%, 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 14.35%, 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. Over the past three years, VGIAX's standard deviation comes in at 12.22%, compared to the category average of 10.73%. Over the past 5 years, the standard deviation of the fund is 11.94% compared to the category average of 10.9%. This makes the fund more volatile than its peers over the past half-decade.

Risk Factors

It's always important to be aware of the downsides to any future investment, so one should not discount the risks that come with this segment. In VGIAX's case, the fund lost 51.87% in the most recent bear market and underperformed comparable funds by 2%. These results could imply that the fund is a worse choice than its peers during a sliding market environment.

Even still, the fund has a 5-year beta of 0.99, so investors should note that it is hypothetically 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. Over the past 5 years, the fund has a negative alpha of -0.27. This means that managers in this portfolio find it difficult to pick securities that generate better-than-benchmark returns.

Holdings

Investigating 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 largely on equities that are traded in the United States.

As of the last filing date, the mutual fund has 76.1% of its assets in stocks, which have an average market capitalization of $234.37 billion. The fund has the heaviest exposure to the following market sectors:

1. Technology

2. Finance

With turnover at about 146%, this fund is making more trades in a given year than the average of comparable funds.

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, VGIAX is a no load fund. It has an expense ratio of 0.23% compared to the category average of 1%. From a cost perspective, VGIAX is actually cheaper than its peers.

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.

Want even more information about VGIAX? Then go over to Zacks.com and check out our mutual fund comparison tool, and all of the other great features that we have to help you with your mutual fund analysis for additional information. If you want to check out our stock reports as well, make sure to go to Zacks.com to see all of the great tools we have to offer, including our time-tested Zacks Rank.

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