There are plenty of choices in the Large Cap Growth category, but where should you start your research? Well, one fund that might be worth investigating is Vanguard US Growth Admiral (VWUAX). VWUAX carries a Zacks Mutual Fund Rank of 2 (Buy), which is based on nine forecasting factors like size, cost, and past performance.
Objective
We classify VWUAX in the Large Cap Growth category, an area rife with potential choices. Large Cap Growth funds invest in many large U.S. companies that are expected to grow much faster compared to other large-cap stocks. To be considered large-cap, companies must have a market cap over $10 billion.
History of Fund/Manager
Vanguard Group is responsible for VWUAX, and the company is based out of Malvern, PA. Vanguard US Growth Admiral made its debut in August of 2001, and since then, VWUAX has accumulated about $16.77 billion in assets, per the most up-to-date date available. The fund is currently managed by a team of investment professionals.
Performance
Of course, investors look for strong performance in funds. This fund in particular has delivered a 5-year annualized total return of 12.96%, and it sits 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 15.76%, 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. The standard deviation of VWUAX over the past three years is 13.91% compared to the category average of 11.73%. Over the past 5 years, the standard deviation of the fund is 13.41% compared to the category average of 11.63%. This makes the fund more volatile than its peers over the past half-decade.
Risk Factors
Investors should always remember the downsides to a potential investment, and this segment carries some risks one should be aware of. In the most recent bear market, VWUAX lost 47.12% and outperformed its peer group by 2%. This means that the fund could possibly be a better choice than its peers during a down market environment.
Nevertheless, investors should also note that the fund has a 5-year beta of 1.05, which means it is hypothetically more volatile than 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. The fund has produced a positive alpha over the past 5 years of 1.66, which shows that managers in this portfolio are skilled in picking 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 primarily on equities that are traded in the United States.
This fund is currently holding about 97.78% stock in stocks, which have an average market capitalization of $217.97 billion. The fund has the heaviest exposure to the following market sectors:
- Technology
- Retail Trade
Turnover is about 33%, so those in charge of the fund make more traders than comparable funds in a given year.
Expenses
As competition heats up in the mutual fund market, costs become increasingly important. Compared to its otherwise identical counterpart, a low-cost product will be an outperformer, all other things being equal. Thus, taking a closer look at cost-related metrics is vital for investors. In terms of fees, VWUAX is a no load fund. It has an expense ratio of 0.27% compared to the category average of 1.08%. VWUAX is actually cheaper than its peers when you consider factors like cost.
This fund requires a minimum initial investment of $50,000, and each subsequent investment should be at least $1.
Bottom Line
Overall, Vanguard US Growth Admiral ( VWUAX ) has a high Zacks Mutual Fund rank, and in conjunction with its comparatively strong performance, average downside risk, and lower fees, Vanguard US Growth Admiral ( VWUAX ) looks like a good potential choice for investors right now.
This could just be the start of your research on VWUAXin the Large Cap Growth 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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Zacks Investment Research