Is Vanguard Mid-Cap Index Investor (VIMSX) a Strong Mutual Fund Pick Right Now?

Are you on the hunt for a Mid Cap Blend fund? You should think about starting with Vanguard Mid-Cap Index Investor (VIMSX). While this fund is not tracked by the Zacks Mutual Fund Rank, we were able to examine other factors like performance, volatility, and cost.

Objective

VIMSX is one of many funds to choose from. Because Mid Cap Blend mutual funds typically feature a portfolio filled with stocks of various sizes and styles, it allows for a diversification strategy focusing on companies with market caps between $2 billion and $10 billion. Mid-cap blends, while offering exciting growth potential, income opportunities, and value picks, offer some stability as well.

History of Fund/Manager

VIMSX finds itself in the Vanguard Group family, based out of Malvern, PA. Since Vanguard Mid-Cap Index Investor made its debut in May of 1998, VIMSX has garnered more than $276.20 million in assets. Aaron Choi is the fund's current manager and has held that role since August of 2023.

Performance

Investors naturally seek funds with strong performance. VIMSX has a 5-year annualized total return of 7.3%, 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 16.28%, 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. The standard deviation of VIMSX over the past three years is 13.46% compared to the category average of 12.23%. Over the past 5 years, the standard deviation of the fund is 16.72% compared to the category average of 14.05%. This makes the fund more volatile than its peers over the past half-decade.

Risk Factors

Investors should not forget about beta, an important way to measure a mutual fund's risk compared to the market as a whole. VIMSX has a 5-year beta of 1.01, which means it is likely to be as volatile as the market average. Alpha is an additional metric to take into consideration, since it represents a portfolio's performance on a risk-adjusted basis relative to a benchmark, which in this case, is the S&P 500. VIMSX's 5-year performance has produced a negative alpha of -5.63, which means managers in this portfolio find it difficult to pick securities that generate better-than-benchmark returns.

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, VIMSX is a no load fund. It has an expense ratio of 0.17% compared to the category average of 0.93%. Looking at the fund from a cost perspective, VIMSX is actually cheaper than its peers.

Investors should also note that the minimum initial investment for the product is $0 and that each subsequent investment has no minimum amount.

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

Bottom Line

For additional information on this product, or to compare it to other mutual funds in the Mid Cap Blend, make sure to go to www.zacks.com/funds/mutual-funds for additional information. If you are more of a stock investor, make sure to also check out our Zacks Rank, and our full suite of tools we have available for novice and professional investors alike.

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This article originally published on Zacks Investment Research (zacks.com).

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