Is Vanguard Equity Income Admiral (VEIRX) a Strong Mutual Fund Pick Right Now?

If investors are looking at the Large Cap Value fund category, Vanguard Equity Income Admiral (VEIRX) could be a potential option. VEIRX bears a Zacks Mutual Fund Rank of 1 (Strong Buy), which is based on various forecasting factors like size, cost, and past performance.

Objective

VEIRX is one of many Large Cap Value mutual funds to choose from. These funds invest in equities with a market capitalization of $10 billion or more, but whose share prices do not reflect their intrinsic value. This strategy can often produce low P/E ratios and high dividend yields; however, growth levels are oftentimes cut back. These funds' high growth opportunities are slowed even more since large-cap stocks are usually in more stable industries with low to moderate growth prospects. Thus, investors interested in a stable income stream find Large Cap Value funds very appealing.

History of Fund/Manager

VEIRX is a part of the Vanguard Group family of funds, a company based out of Malvern, PA. Vanguard Equity Income Admiral debuted in August of 2001. Since then, VEIRX has accumulated assets of about $62.30 billion, according to the most recently available information. The fund's current manager, Sharon Hill, has been in charge of the fund since February of 2021.

Performance

Of course, investors look for strong performance in funds. This fund in particular has delivered a 5-year annualized total return of 11.82%, 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 15.63%, which places it in the middle third during this time-frame.

It is important to note that the product's returns may not reflect all its expenses. Any fees not reflected would lower the returns. Total returns do not reflect the fund's [%] sale charge. If sales charges were included, total returns would have been lower.

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. VEIRX's standard deviation over the past three years is 10.58% compared to the category average of 11.39%. Looking at the past 5 years, the fund's standard deviation is 13.34% compared to the category average of 13.63%. This makes the fund less volatile than its peers over the past half-decade.

Risk Factors

Investors should note that the fund has a 5-year beta of 0.71, so it is likely going to be less volatile than 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. The fund has produced a positive alpha over the past 5 years of 1.35, which shows that managers in this portfolio are skilled in picking securities that generate better-than-benchmark returns.

Expenses

Costs are increasingly important for mutual fund investing, and particularly as competition heats up in this market. And all things being equal, a lower cost product will outperform its otherwise identical counterpart, so taking a closer look at these metrics is key for investors. In terms of fees, VEIRX is a no load fund. It has an expense ratio of 0.17% compared to the category average of 0.91%. So, VEIRX 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.

Fees charged by investment advisors have not been taken into consideration. Returns would be less if those were included.

Bottom Line

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

Your research on the Large Cap Value 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. And don't forget, Zacks has all of your needs covered on the equity side too! Make sure to check out Zacks.com for more information on our screening capabilities, Rank, and all our articles as well.

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