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

If you've been stuck searching for Large Cap Value funds, consider Vanguard Equity Income Admiral (VEIRX) as a possibility. VEIRX possesses 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

Vanguard Group is based in Malvern, PA, and is the manager of VEIRX. Since Vanguard Equity Income Admiral made its debut in August of 2001, VEIRX has garnered more than $59.07 billion in assets. The fund is currently managed by Sharon Hill who 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 13.8%, and is in the top third among its category peers. But if you are looking for a shorter time frame, it is also worth looking at its 3-year annualized total return of 13.51%, 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 VEIRX over the past three years is 11.34% compared to the category average of 11.33%. The fund's standard deviation over the past 5 years is 13.46% compared to the category average of 13.53%. This makes the fund less volatile than its peers over the past half-decade.

Risk Factors

With a 5-year beta of 0.74, the fund is likely to be less volatile than the market average. Another factor to consider is alpha, as it reflects a portfolio's performance on a risk-adjusted basis relative to a benchmark-in this case, the S&P 500. With a positive alpha of 1.75, managers in this portfolio are skilled in picking securities that generate better-than-benchmark returns.

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, VEIRX is a no load fund. It has an expense ratio of 0.17% compared to the category average of 0.90%. Looking at the fund from a cost perspective, VEIRX is actually cheaper than its peers.

While the minimum initial investment for the product is $50,000, 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

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.

For additional information on this product, or to compare it to other mutual funds in the Large Cap Value, make sure to go to www.zacks.com/funds/mutual-funds 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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This article originally published on Zacks Investment Research (zacks.com).

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