Yahoo Finance Is VWITX a Strong Bond Fund Right Now?
If you have been looking for Muni - Bonds funds, a place to start could be Vanguard Intermediate-Term Tax-Exempt Investor (VWITX). VWITX holds a Zacks Mutual Fund Rank of 1 (Strong Buy), which is based on various forecasting factors like size, cost, and past performance.
Objective
We classify VWITX in the Muni - Bonds category, an area rife with potential choices. Muni - Bonds funds focus their investments on debt securities issued by state and local governments. These are typically used to pay for the construction of infrastructure, the operation of public schools, and other municipal functions. These securities can come in the form of revenue bonds, which are backed by taxes, as well as " general obligation " bonds that are not backed by a defined source. Investors are usually interested that come with most municipal bonds, which can be especially important for those in higher tax brackets.
History of Fund/Manager
Vanguard Group is based in Malvern, PA, and is the manager of VWITX. Since Vanguard Intermediate-Term Tax-Exempt Investor made its debut in September of 1977, VWITX has garnered more than $2.30 billion in assets. The fund is currently managed by James D'Arcy who has been in charge of the fund since June of 2013.
Performance
Investors naturally seek funds with strong performance. This fund carries a 5-year annualized total return of 1.45%, 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 -0.61%, 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. VWITX's standard deviation over the past three years is 6.13% compared to the category average of 10.22%. The standard deviation of the fund over the past 5 years is 5.48% compared to the category average of 10.44%. This makes the fund less volatile than its peers over the past half-decade.
This fund has a beta of 0.72, meaning that it is less volatile than a broad market index of fixed income securities. Taking this into account, VWITX has a positive alpha of 0.05, which measures performance on a risk-adjusted basis.
Ratings
Investors should also consider a bond's rating, which is a grade ( 'AAA' to 'D' ) given to a bond that indicates its credit quality. With this letter scale in mind, VWITX has 59.41% in high quality bonds rated at least 'AA' or higher, while 36.06% are of medium quality, with ratings of 'A' to 'BBB'. The fund has an average quality of AA, and focuses on high quality securities.
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, VWITX is a no load fund. It has an expense ratio of 0.17% compared to the category average of 0.79%. So, VWITX is actually cheaper than its peers from a cost perspective.
This fund requires a minimum initial investment of $3,000, and each subsequent investment should be at least $1.
Fees charged by investment advisors have not been taken into considiration. Returns would be less if those were included.
Bottom Line
Overall, Vanguard Intermediate-Term Tax-Exempt Investor ( VWITX ) 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 Muni - Bonds, make sure to go to www.zacks.com/funds/mutual-funds 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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