If you've been stuck searching for Index funds, consider Vanguard Institutional Index Plus (VIIIX) as a possibility. VIIIX has no Zacks Mutual Fund Rank, but we have been able to look into other metrics like performance, volatility, and cost.
History of Fund/Manager
VIIIX is a part of the Vanguard Group family of funds, a company based out of Malvern, PA. The Vanguard Institutional Index Plus made its debut in July of 1997 and VIIIX has managed to accumulate roughly $113.51 billion in assets, as of the most recently available information. The fund is currently managed by Donald M. Butler who has been in charge of the fund since December of 2000.
Obviously, what investors are looking for in these funds is strong performance relative to their peers. VIIIX has a 5-year annualized total return of 10.1% and it sits 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 12.68%, 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 VIIIX over the past three years is 12.21% compared to the category average of 7.75%. The fund's standard deviation over the past 5 years is 11.96% compared to the category average of 8.86%. This makes the fund more volatile than its peers over the past half-decade.
One cannot ignore the volatility of this segment, however, as it is always important for investors to remember the downside to any potential investment. VIIIX lost 50.88% in the most recent bear market and underperformed comparable funds by 5%. These results could imply that the fund is a worse choice than its peers during a sliding market environment.
Investors should note that the fund has a 5-year beta of 1, so it is likely going to be as volatile as the market at large. 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. VIIIX has generated a negative alpha over the past five years of -0.01, demonstrating that managers in this portfolio find it difficult to pick 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 principally on equities that are traded in the United States.
Right now, 93.61% of this mutual fund's holdings are stocks, and these companies have an average market capitalization of $215.60 billion. The fund has the heaviest exposure to the following market sectors:
Turnover is 10%, which means this fund makes fewer trades than the average comparable fund.
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, VIIIX is a no load fund. It has an expense ratio of 0.02% compared to the category average of 0.76%. Looking at the fund from a cost perspective, VIIIX is actually cheaper than its peers.
Investors should also note that the minimum initial investment for the product is $100 million and that each subsequent investment needs to be at $1.
Don't stop here for your research on Index funds. We also have plenty more on our site in order to help you find the best possible fund for your portfolio. Make sure to check out www.zacks.com/funds/mutual-funds for more information about the world of funds, and feel free to compare VIIIX to its peers as well for additional information. If you want to check out our stock reports as well, make sure to go to Zacks.com to see all of the great tools we have to offer, including our time-tested Zacks Rank.
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