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Are you on the hunt for an Index fund? You should think about starting with Vanguard Institutional Index Plus (VIIIX). While this fund is not tracked by the Zacks Mutual Fund Rank, we were able to examine other factors like performance, volatility, and cost.
History of Fund/Manager
VIIIX finds itself in the Vanguard Group family, based out of Malvern, PA. The Vanguard Institutional Index Plus made its debut in July of 1997 and VIIIX has managed to accumulate roughly $109.57 billion in assets, as of the most recently available information. The fund is currently managed by Donald M. Butler who has been in charge of the fund since December of 2000.
Performance
Investors naturally seek funds with strong performance. This fund carries a 5-year annualized total return of 14.5%, 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 16.09%, which places it in the top third during this time-frame.
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 9.16%, the standard deviation of VIIIX over the past three years is 9.44%. Looking at the past 5 years, the fund's standard deviation is 9.58% compared to the category average of 9.41%. This makes the fund more volatile than its peers over the past half-decade.
Risk Factors
One cannot ignore the volatility of this segment, however, as it is always important for investors to remember the downside to any potential investment. VIIIX lost 50.88% in the most recent bear market and outperformed its peer group by 4.33%. This might suggest that the fund is a better choice than its peers during a bear market.
Investors should not forget about beta, an important way to measure a mutual fund's risk compared to the market as a whole. VIIIX has a 5-year beta of 1, which means it is likely to be as volatile as 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 negative alpha of -0.01, managers in this portfolio find it difficult to pick securities that generate better-than-benchmark returns.
Holdings
Investigating the equity holdings of a mutual fund is also a valuable exercise. This can show us how the manager is applying their stated methodology, as well as if there are any inherent biases in their approach. For this particular fund, the focus is mostly on equities that are traded in the United States.