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If investors are looking at the Investment Grade Bond - Intermediate fund category, Vanguard Core Bond Admiral (VCOBX) could be a potential option. VCOBX carries a Zacks Mutual Fund Rank of 2 (Buy), which is based on various forecasting factors like size, cost, and past performance.
Objective
We classify VCOBX in the Investment Grade Bond - Intermediate category, an area rife with potential choices. Investment Grade Bond - Intermediate funds target the middle part of the curve, typically by investing in bonds that mature in more than three years but less than 15 years. At these maturity levels, fixed income instruments have medium duration risk--but they compensate investors with a respectable yield compared to shorter maturity options. Finally, a focus on investment grade ensures that these funds are safer, but yields will be lower than in the junk bond category.
History of Fund/Manager
VCOBX finds itself in the Vanguard Group family, based out of Malvern, PA. Since Vanguard Core Bond Admiral made its debut in March of 2016, VCOBX has garnered more than $12.35 billion in assets. The fund's current manager is a team of investment professionals.
Performance
Investors naturally seek funds with strong performance. This fund carries a 5-year annualized total return of 0.71%, and is 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 -1.72%, 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 10.87%, the standard deviation of VCOBX over the past three years is 7.62%. Over the past 5 years, the standard deviation of the fund is 6.46% compared to the category average of 10.81%. This makes the fund less volatile than its peers over the past half-decade.
VCOBX carries a beta of 0.96, meaning that the fund is less volatile than a broad market index of fixed income securities. With this in mind, it has a positive alpha of 0.76, 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, VCOBX has 59.8% in high quality bonds rated at least 'AA' or higher, while 40% are of medium quality, with ratings of 'A' to 'BBB'. The fund has an average quality of AA, and focuses on high quality securities.