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Is VFIIX a Strong Bond Fund Right Now?

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Government Mortgage - Intermediate fund seekers should consider taking a look at Vanguard GNMA Investor (VFIIX). VFIIX carries a Zacks Mutual Fund Rank of 1 (Strong Buy), which is based on nine forecasting factors like size, cost, and past performance.

Objective

The world of Government Mortgage - Intermediate funds is an area filled with choices, such as VFIIX. A mortgage-backed security (MBS) is a type of asset-backed security that packages mortgages together and then sells off the pooled securities. Government Mortgage - Intermediate funds focus on this market; this fund category presents a medium risk and yield profile, and concentrates on MBS with at least three years to maturity but less than 10.

History of Fund/Manager

Vanguard Group is based in Malvern, PA, and is the manager of VFIIX. Since Vanguard GNMA Investor made its debut in June of 1980, VFIIX has garnered more than $7.31 billion in assets. The fund's current manager, Joseph Marvan, has been in charge of the fund since May of 2019.

Performance

Of course, investors look for strong performance in funds. VFIIX has a 5-year annualized total return of 1.91% and it sits in the top third among its category peers. Investors who prefer analyzing shorter time frames should look at its 3-year annualized total return of 3.46%, 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. Compared to the category average of 8.79%, the standard deviation of VFIIX over the past three years is 1.86%. The fund's standard deviation over the past 5 years is 1.99% compared to the category average of 7.46%. This makes the fund less volatile than its peers over the past half-decade.

This fund has a beta of 0.34, meaning that it is less volatile than a broad market index of fixed income securities. Taking this into account, VFIIX has a negative alpha of -0.09, which measures performance on a risk-adjusted basis.

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, VFIIX is a no load fund. It has an expense ratio of 0.21% compared to the category average of 0.79%. VFIIX is actually cheaper than its peers when you consider factors like cost.

While the minimum initial investment for the product is $3,000, investors should also note that each subsequent investment needs to be at least $1.

Bottom Line

Overall, Vanguard GNMA Investor ( VFIIX ) has a high Zacks Mutual Fund rank, and in conjunction with its comparatively strong performance, better downside risk, and lower fees, Vanguard GNMA Investor ( VFIIX ) looks like a good potential choice for investors right now.

Don't stop here for your research on Government Mortgage - Intermediate 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 VFIIX to its peers as well 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.


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