Yahoo Finance Is Vanguard Total Stock Market Index Investor (VTSMX) a Strong Mutual Fund Pick Right Now?
There are plenty of choices in the Index category, but where should you start your research? Well, one fund that might be worth investigating is Vanguard Total Stock Market Index Investor VTSMX. The fund does not have a Zacks Mutual Fund Rank, though we have been able to explore other metrics like performance, volatility, and cost.
History of Fund/Manager
Vanguard Group is responsible for VTSMX, and the company is based out of Malvern, PA. Vanguard Total Stock Market Index Investor debuted in April of 1992. Since then, VTSMX has accumulated assets of about $133.02 billion, according to the most recently available information. Gerard C. O'Reilly is the fund's current manager and has held that role since December of 1994.
Performance
Obviously, what investors are looking for in these funds is strong performance relative to their peers. This fund in particular has delivered a 5-year annualized total return of 12.67%, 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 12.07%, 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 8.79%, the standard deviation of VTSMX over the past three years is 10.36%. The fund's standard deviation over the past 5 years is 9.79% compared to the category average of 8.68%. This makes the fund more volatile than its peers over the past half-decade.
Risk Factors
Investors cannot discount the risks to this segment though, as it is always important to remember the downside for any potential investment. VTSMX lost 50.89% in the most recent bear market and outperformed its peer group by 4.34%. This makes the fund a possibly better choice than its peers during a sliding market environment.
Even still, the fund has a 5-year beta of 1, so investors should note that it is hypothetically as volatile as 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. VTSMX's 5-year performance has produced a negative alpha of -0.4, which means 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.
Right now, 86.25% of this mutual fund's holdings are stocks, and these companies have an average market capitalization of $160.05 billion. The fund has the heaviest exposure to the following market sectors:
Technology
Finance
Industrial Cyclical
With turnover at about 3%, this fund is making fewer trades than 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, VTSMX is a no load fund. It has an expense ratio of 0.14% compared to the category average of 0.85%. So, VTSMX is actually cheaper than its peers from a cost perspective.
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
Want even more information about VTSMX? 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 are more of a stock investor, make sure to also check out our Zacks Rank, and our full suite of tools we have available for novice and professional investors alike.
Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report
Get Your Free (VTSMX): Fund Analysis Report
To read this article on Zacks.com click here.
