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Is VWETX a Strong Bond Fund Right Now?

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Any investors hoping to find an Investment Grade Bond - Long fund might consider looking past Vanguard Long-Term Investment-Grade Income Admiral (VWETX - Free Report) . VWETX bears a Zacks Mutual Fund Rank of 4 (Sell), which is based on various forecasting factors like size, cost, and past performance.

Objective

VWETX is part of the Investment Grade Bond - Long section, an area loaded with various investment options. Investment Grade Bond - Long funds focus on the long end of the curve, generally with bonds that mature in more than 10 years. Fixed income instruments with this maturity level usually have high duration risk, but they also compensate investors with a heftier yield, at least when compared to their short maturity counterparts. Lastly, the focus on investment grade will make funds here safer, but yields will be lower than in the junk bond category.

History of Fund/Manager

Vanguard Group is responsible for VWETX, and the company is based out of Malvern, PA. Since Vanguard Long-Term Investment-Grade Income Admiral made its debut in February of 2001, VWETX has garnered more than $11.47 billion in assets. 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 has delivered a 5-year annualized total return of -0.78%, and is in the bottom 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 -6.4%, which places it in the middle third during this time-frame.

It is important to note that the product's returns may not reflect all its expenses. Any fees not reflected would lower the returns. Total returns do not reflect the fund's [%] sale charge. If sales charges were included, total returns would have been lower.

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, VWETX's standard deviation comes in at 15.72%, compared to the category average of 15.02%. The standard deviation of the fund over the past 5 years is 14.36% compared to the category average of 14.89%. This makes the fund less volatile than its peers over the past half-decade.

With a beta of 1.83, this fund is more volatile than a broad market index of fixed income securities. Taking this into account, VWETX has a positive alpha of 2.77, which measures performance on a risk-adjusted basis.

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, VWETX is a no load fund. It has an expense ratio of 0.11% compared to the category average of 0.70%. Looking at the fund from a cost perspective, VWETX is actually cheaper than its peers.

Investors should also note that the minimum initial investment for the product is $50,000 and that each subsequent investment needs to be at $1

Fees charged by investment advisors have not been taken into considiration. Returns would be less if those were included.

Bottom Line

Overall, even with its comparatively similar performance, average downside risk, and lower fees, Vanguard Long-Term Investment-Grade Income Admiral ( VWETX ) has a low Zacks Mutual Fund rank, and therefore looks a somewhat weak choice for investors right now.

For additional information on the Investment Grade Bond - Long 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 VWETX too 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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