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Is VFIJX a Strong Bond Fund Right Now?

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If you have been looking for Government Mortgage - Intermediate funds, a place to start could be Vanguard GNMA Admiral (VFIJX). VFIJX bears 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 VFIJX. 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

VFIJX is a part of the Vanguard Group family of funds, a company based out of Malvern, PA. The Vanguard GNMA Admiral made its debut in February of 2001 and VFIJX has managed to accumulate roughly $19.52 billion in assets, as of the most recently available information. The fund's current manager, Joseph F. Marvan, has been in charge of the fund since May of 2019.

Performance

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 2.67%, 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 3.41%, which places it in the middle 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 8.41%, the standard deviation of VFIJX over the past three years is 2.12%. The standard deviation of the fund over the past 5 years is 2.03% compared to the category average of 7.46%. This makes the fund less volatile than its peers over the past half-decade.

VFIJX carries a beta of 0.44, meaning that the fund is less volatile than a broad market index of fixed income securities. With this in mind, it has a positive alpha of 0.03, 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, VFIJX is a no load fund. It has an expense ratio of 0.11% compared to the category average of 0.82%. So, VFIJX is actually cheaper than its peers from a cost perspective.

Investors need to be aware that with this product, the minimum initial investment is $50,000; each subsequent investment needs to be at least $1.

Bottom Line

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

Your research on the Government Mortgage - Intermediate segment doesn't have to stop here. You can check out all the great mutual fund tools we have to offer by going to www.zacks.com/funds/mutual-funds to see the additional features we offer 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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