Is Vanguard Consumer Staples Index Administrative (VCSAX) A Strong Mutual Fund Pick Right Now?

Large Cap Blend fund seekers should consider taking a look at Vanguard Consumer Staples Index Administrative VCSAX. VCSAX holds a Zacks Mutual Fund Rank of 1 (Strong Buy), which is based on nine forecasting factors like size, cost, and past performance.

Objective

We note that VCSAX is a Large Cap Blend option, an area loaded with different options. More often than not, Large Cap Blend mutual funds invest in companies with a market cap of over $10 billion. Buying stakes in bigger companies offer these funds more stability, and are well-suited for investors with a " buy and hold " mindset. Additionally, blended funds mix large, more established firms into their portfolios, giving investors exposure to value and growth opportunities.

History of Fund/Manager

Vanguard Group is based in Malvern, PA, and is the manager of VCSAX. Vanguard Consumer Staples Index Administrative debuted in January of 2004. Since then, VCSAX has accumulated assets of about $699.16 million, according to the most recently available information. The fund is currently managed by Michael A. Johnson who has been in charge of the fund since December of 2010.

Performance

Of course, investors look for strong performance in funds. This fund has delivered a 5-year annualized total return of 12.4%, and it sits 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 9.06%, which places it in the bottom 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 VCSAX over the past three years is 9.35% compared to the category average of 10.49%. Looking at the past 5 years, the fund's standard deviation is 9.85% compared to the category average of 9.90%. This makes the fund less volatile than its peers over the past half-decade.

Risk Factors

It's always important to be aware of the downsides to any future investment, so one should not discount the risks that come with this segment. In VCSAX's case, the fund lost 27.95% in the most recent bear market and outperformed its peer group by 21.81%. This means that the fund could possibly be a better choice than its peers during a down market environment.

Even still, the fund has a 5-year beta of 0.7, 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. The fund has produced a positive alpha over the past 5 years of 1.44, which shows that managers in this portfolio are skilled in picking securities that generate better-than-benchmark returns.

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, VCSAX is a no load fund. It has an expense ratio of 0.10% compared to the category average of 0.91%. Looking at the fund from a cost perspective, VCSAX 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

Overall, Vanguard Consumer Staples Index Administrative has a high Zacks Mutual Fund rank, and in conjunction with its comparatively weak performance, average downside risk, and lower fees, Vanguard Consumer Staples Index Administrative looks like a great potential choice for investors right now.

For additional information on this product, or to compare it to other mutual funds in the Large Cap Blend, make sure to go to www.zacks.com/funds/mutual-funds for additional information. Want to learn even more? We have a full suite of tools on stocks that you can use to find the best choices for your portfolio too, no matter what kind of investor you are.