If you've been stuck searching for Government Bond - Long funds, consider Vanguard Long-Term Treasury Investor (VUSTX) as a possibility. VUSTX possesses a Zacks Mutual Fund Rank of 2 (Buy), which is based on nine forecasting factors like size, cost, and past performance.
Objective
VUSTX is classified in the Government Bond - Long segment by Zacks, an area full of possibilities. Often seen as risk-free assets and described as extremely low-risk from a default perspective, Government Bond - Long funds hold securities issued by the United States' federal government. This fund category focuses on the long end of the curve, which can result in higher yields but greater sensitivity to interest rate fluctuations.
History of Fund/Manager
Vanguard Group is based in Malvern, PA, and is the manager of VUSTX. The Vanguard Long-Term Treasury Investor made its debut in May of 1986 and VUSTX has managed to accumulate roughly $1.13 billion in assets, as of the most recently available information. Gemma Wright Casparius is the fund's current manager and has held that role since January of 2015.
Performance
Of course, investors look for strong performance in funds. This fund has delivered a 5-year annualized total return of 7.76%, and is in the top 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 11.88%, 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 VUSTX over the past three years is 11.97% compared to the category average of 12.19%. Looking at the past 5 years, the fund's standard deviation is 11.42% compared to the category average of 11.49%. This makes the fund less volatile than its peers over the past half-decade.
VUSTX carries a beta of 2.92, meaning that the fund is more volatile than a broad market index of fixed income securities. With this in mind, it has a negative alpha of -1.9, 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, VUSTX is a no load fund. It has an expense ratio of 0.20% compared to the category average of 0.87%. So, VUSTX is actually cheaper than its peers from a cost perspective.
Investors should also note that the minimum initial investment for the product is $3,000 and that each subsequent investment needs to be at $1.
Bottom Line
Overall, Vanguard Long-Term Treasury Investor ( VUSTX ) has a high Zacks Mutual Fund rank, and in conjunction with its comparatively strong performance, average downside risk, and lower fees, Vanguard Long-Term Treasury Investor ( VUSTX ) looks like a good potential choice for investors right now.
For additional information on this product, or to compare it to other mutual funds in the Government Bond - Long, make sure to go to www.zacks.com/funds/mutual-funds 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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