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Is Vanguard Materials Index Admiral (VMIAX) a Strong Mutual Fund Pick Right Now?

If you're looking for a Mid Cap Blend fund category, then a possible option is Vanguard Materials Index Admiral (VMIAX). VMIAX has no Zacks Mutual Fund Rank, but we have been able to look into other metrics like performance, volatility, and cost.

Objective

VMIAX is classified in the Mid Cap Blend category by Zacks, an area full of possibilities. Mid Cap Blend mutual funds usually feature a portfolio with stocks of various styles and sizes, allowing for diversification within a strategy that focuses on companies in the $2 billion to $10 billion market cap range. A mid-cap blend fund provides exposure to exciting growth potential, income opportunities, and value picks, while also attempting some level of stability through diversification.

History of Fund/Manager

Vanguard Group is responsible for VMIAX, and the company is based out of Malvern, PA. The Vanguard Materials Index Admiral made its debut in January of 2004 and VMIAX has managed to accumulate roughly $538.95 million in assets, as of the most recently available information. The fund is currently managed by William A. Coleman who has been in charge of the fund since August of 2015.

Performance

Investors naturally seek funds with strong performance. This fund carries a 5-year annualized total return of 6.6%, and is in the middle 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 8.09%, which places it in the middle 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. VMIAX's standard deviation over the past three years is 15.06% compared to the category average of 14.49%. Over the past 5 years, the standard deviation of the fund is 17.04% compared to the category average of 13.75%. This makes the fund more volatile than its peers over the past half-decade.

Risk Factors

One cannot ignore the volatility of this segment, however, as it is always important for investors to remember the downside to any potential investment. VMIAX lost 56.1% in the most recent bear market and underperformed its peer group by 5%. This could mean that the fund is a worse choice than comparable funds during a bear market.

Nevertheless, with a 5-year beta of 1.24, the fund is likely to be more volatile than the market average. 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 -6.34. This means that managers in this portfolio find it difficult to pick 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, VMIAX is a no load fund. It has an expense ratio of 0.10% compared to the category average of 1.08%. Looking at the fund from a cost perspective, VMIAX is actually cheaper than its peers.

While the minimum initial investment for the product is $100,000, investors should also note that each subsequent investment needs to be at least $1.

Bottom Line

This could just be the start of your research on VMIAXin the Mid Cap Blend 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. 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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