Is Vanguard Wellesley Income Admiral (VWIAX) a Strong Mutual Fund Pick Right Now?
There are plenty of choices in the Allocation Balanced category, but where should you start your research? Well, one fund that might be worth investigating is Vanguard Wellesley Income Admiral (VWIAX). VWIAX bears a Zacks Mutual Fund Rank of 1 (Strong Buy), which is based on nine forecasting factors like size, cost, and past performance.
Objective
The world of Zacks' Allocation Balanced funds is an area filled with options, such as VWIAX. These funds like to invest in a variety of asset types, finding a balance between stocks, bonds, cash, and sometimes even precious metals and commodities; they are mostly categorized by their respective asset allocation. For investors, Allocation Balanced funds can provide an entry point into diversified mutual funds, and present core holding options for a portfolio of funds.
History of Fund/Manager
Vanguard Group is based in Malvern, PA, and is the manager of VWIAX. The Vanguard Wellesley Income Admiral made its debut in May of 2001 and VWIAX has managed to accumulate roughly $39.98 billion in assets, as of the most recently available information. The fund's current manager is a team of investment professionals.
Performance
Investors naturally seek funds with strong performance. This fund carries a 5-year annualized total return of 5.71%, and is in the top third among its category peers. Investors who prefer analyzing shorter time frames should look at its 3-year annualized total return of 6.34%, 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 8.13%, the standard deviation of VWIAX over the past three years is 4.64%. The fund's standard deviation over the past 5 years is 4.54% compared to the category average of 8.16%. This makes the fund less 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. In VWIAX's case, the fund lost 18.73% in the most recent bear market and outperformed its peer group by 17.67%. These results could imply that the fund is a better choice than its peers during a sliding market environment.
Even still, the fund has a 5-year beta of 0.33, 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. VWIAX has generated a positive alpha over the past five years of 1.58, demonstrating that managers in this portfolio are skilled in picking securities that generate better-than-benchmark returns.
Expenses
For investors, taking a closer look at cost-related metrics is key, since costs are increasingly important for mutual fund investing. Competition is heating up in this space, and a lower cost product will likely outperform its otherwise identical counterpart, all things being equal. In terms of fees, VWIAX is a no load fund. It has an expense ratio of 0.16% compared to the category average of 0.88%. So, VWIAX is actually cheaper than its peers from a cost perspective.
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 Wellesley Income Admiral ( VWIAX ) has a high Zacks Mutual Fund rank, strong performance, average downside risk, and lower fees compared to its peers.
This could just be the start of your research on VWIAXin the Allocation Balanced category. Consider going to www.zacks.com/funds/mutual-funds for additional information about this fund, and all the others that we rank as well for additional information. And don't forget, Zacks has all of your needs covered on the equity side too! Make sure to check out Zacks.com for more information on our screening capabilities, Rank, and all our articles as well.
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