Is Vanguard Target Retirement 2055 Fund (VFFVX) a Strong Mutual Fund Pick Right Now?

Are you on the hunt for a Target Date fund? You should think about starting with Vanguard Target Retirement 2055 Fund (VFFVX). VFFVX 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

Vanguard Group is based in Malvern, PA, and is the manager of VFFVX. Vanguard Target Retirement 2055 Fund debuted in August of 2010. Since then, VFFVX has accumulated assets of about $69.34 billion, according to the most recently available information. The fund's current manager is a team of investment professionals.

Performance

Obviously, what investors are looking for in these funds is strong performance relative to their peers. VFFVX has a 5-year annualized total return of 10.67%, and is in the middle third among its category peers. Investors who prefer analyzing shorter time frames should look at its 3-year annualized total return of 17.19%, which places it in the top 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. Compared to the category average of 10.7%, the standard deviation of VFFVX over the past three years is 10.29%. The standard deviation of the fund over the past 5 years is 13.08% compared to the category average of 13.55%. 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 0.84, which means it is hypothetically less volatile than the market at large. 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. VFFVX has generated a negative alpha over the past five years of -2.19, demonstrating that managers in this portfolio find it difficult to pick 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, VFFVX is a no load fund. It has an expense ratio of 0.08% compared to the category average of 0.49%. So, VFFVX is actually cheaper than its peers from a cost perspective.

While the minimum initial investment for the product is $1,000, investors should also note that 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

This could just be the start of your research on VFFVX in the Target Date category. Consider going to www.zacks.com/funds/mutual-funds for additional information about this fund, and all the others that we rank as well 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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