Vanguard is one of the world’s largest asset management corporations that manage around $3 trillion in assets. It offers nearly 190 domestic funds and 220 funds for foreign markets (as of Aug 31, 2019). It offers asset management and financial planning services to clients across the world.
Unlike other mutual fund companies, Vanguard is owned by the funds themselves, which helps its management focus better on shareholder interests. Among other advantages, it claims to offer low-cost, no-load funds. Vanguard was founded by John C. Bogle in 1975.
Vanguard’s Recent Performance
By the end of August 2019, Vanguard had around $5.6 trillion assets under management. The initial investment of the majority of mutual funds from the family ranges from $0 to $3,000. As of Nov 30, 2019, none of the Vanguard mutual funds carried any load.
Further, Vanguard Massachusetts Tax-Exempt Fund Investor Shares VMATX turned out as one of the best-performing mutual funds from the Vanguard family. The fund posted solid gains in the period between July and September. VMATX, which invests a bulk of its assets in municipal bonds issued by Massachusetts state and local governments, has returned 8.4% in the year to date period.
Factors Supporting Growth
Vanguard invests in a variety of sectors that are sensitive, cyclical and defensive. From the sensitive sectors, maximum investments were made in the technology sector. Among the cyclical sectors, the fund family invested the most in the financial services sector, while among the defensive sectors it invested heavily in healthcare.
Technology Select Sector SPDR (XLK) has gained 40.1% year to date, implying that technology has been the best performer among the 11 S&P 500 sectors so far. The financial and healthcare sectors have also registered year-to-date (YTD) returns of 25.8% and 15.3%, respectively.
3 Best Funds to Buy This Month
Given such bullish circumstances, we have highlighted three Vanguard mutual funds carrying a Zacks Mutual Fund Rank #1 (Strong Buy) or #2 (Buy) and poised to gain from such factors. Moreover, these funds have encouraging three-year and YTD returns. Additionally, the minimum initial investment is within $5000.
We expect these funds to outperform their peers in the future. Remember, the goal of the Zacks Mutual Fund Rank is to guide investors to identify potential winners and losers. Unlike most of the fund-rating systems, the Zacks Mutual Fund Rank is not just focused on past performance, but also on the likely future success of the fund.
The question here is: why should investors consider mutual funds? Reduced transaction costs and diversification of portfolio without several commission charges that are associated with stock purchases are primarily why one should be parking money in mutual funds (read more: Mutual Funds: Advantages, Disadvantages, and How They Make Investors Money).
Vanguard Short-Term Investment-Grade Fund Investor Shares VFSTX seeks income while maintaining limited price volatility. VFSTX invests in a variety of high-quality and, to a lesser extent, medium-quality fixed income securities. The fund also invests to a limited extent in non-investment-grade and fixed income securities, mainly short-term and intermediate-term corporate bonds.
This fund carries a Zacks Mutual Fund Rank #1 and has a history of positive total returns for over 10 years. Specifically, the fund's returns over the three year and YTD benchmarks are 2.8% and 5.5%, respectively. VFSTX has an annual expense ratio of 0.20%, which is below the category average of 0.74%.
Vanguard Short-Term Treasury Fund Investor Shares VFISX seeks current income with minimum price volatility. VFISX invests a large share of its assets in U.S. Treasury instruments such as bills, bonds and notes. VFISX seeks to maintain a dollar-weighted average maturity between one and four years.
This Zacks Mutual Fund Rank #2 fund has a history of positive total returns for over 10 years. Specifically, the fund's returns over the three year and YTD benchmarks are 1.7% and 3.5%, respectively. VFISX has an annual expense ratio of 0.20%, which is below the category average of 0.70%.
Vanguard LifeStrategy Growth Fund VASGX invests in other Vanguard mutual funds with asset allocation of nearly 80% in equity securities and about 20% in debt securities and bonds. VASGX seeks appreciation of income and capital for the long run.
This Zacks Mutual Fund Rank #1 fund has a history of positive total returns for over 10 years. Specifically, the fund's returns over the three year and YTD benchmarks are 10.6% and 19.9%, respectively. VASGX has an annual expense ratio of 0.14%, which is below the category average of 0.77%.
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