There are plenty of choices in the Large Cap Growth category, but where should you start your research? Well, one fund that you should consider investigating is Vanguard Capital Opportunity Investor (VHCOX). VHCOX possesses a Zacks Mutual Fund Rank of 3 (Hold), which is based on nine forecasting factors like size, cost, and past performance.
We classify VHCOX 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 VHCOX, and the company is based out of Malvern, PA. Vanguard Capital Opportunity Investor debuted in August of 1995. Since then, VHCOX has accumulated assets of about $1.78 billion, according to the most recently available information. The fund is currently managed by a team of investment professionals.
Obviously, what investors are looking for in these funds is strong performance relative to their peers. This fund in particular has delivered a 5-year annualized total return of 19.24%, 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 17.12%, 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. VHCOX's standard deviation over the past three years is 20.49% compared to the category average of 17.36%. Over the past 5 years, the standard deviation of the fund is 17.18% compared to the category average of 14.47%. This makes the fund more volatile than its peers over the past half-decade.
Investors should not forget about beta, an important way to measure a mutual fund's risk compared to the market as a whole. VHCOX has a 5-year beta of 1.07, which means it is likely to be more volatile than the market average. Because alpha represents a portfolio's performance on a risk-adjusted basis relative to a benchmark, which is the S&P 500 in this case, one should pay attention to this metric as well. Over the past 5 years, the fund has a positive alpha of 1.88. This means that managers in this portfolio are skilled in picking securities that generate better-than-benchmark returns.
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.
The mutual fund currently has 78.3% of its holdings in stocks, with an average market capitalization of $192.91 billion. The fund has the heaviest exposure to the following market sectors:
With turnover at about 8%, this fund makes fewer trades than comparable funds.
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, VHCOX is a no load fund. It has an expense ratio of 0.44% compared to the category average of 1.03%. From a cost perspective, VHCOX is actually cheaper than its peers.
Investors need to be aware that with this product, the minimum initial investment is $3,000; each subsequent investment needs to be at least $1.
Overall, Vanguard Capital Opportunity Investor ( VHCOX ) has a neutral Zacks Mutual Fund rank, and in conjunction with its comparatively similar performance, average downside risk, and lower fees, Vanguard Capital Opportunity Investor ( VHCOX ) looks like a somewhat average choice for investors right now.
This could just be the start of your research on VHCOXin 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. Zacks provides a full suite of tools to help you analyze your portfolio - both funds and stocks - in the most efficient way possible.
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