Is Vanguard Energy Admiral (VGELX) a Strong Mutual Fund Pick Right Now?

Zacks Equity Research
·3 min read

Have you been searching for a Sector - Energy fund? You might want to begin with Vanguard Energy Admiral (VGELX). VGELX holds a Zacks Mutual Fund Rank of 3 (Hold), which is based on nine forecasting factors like size, cost, and past performance.

Objective

VGELX is one of many Sector - Energy funds to choose from. Sector - Energy mutual funds are comprised of various changing and hugely important industries throughout the massive global energy sector. Even though clean energy is beginning to pick up steam, oil and gas companies have the highest exposure, but carbon-based fuels will be the biggest group of assets in these funds.

History of Fund/Manager

Vanguard Group is based in Malvern, PA, and is the manager of VGELX. Since Vanguard Energy Admiral made its debut in November of 2001, VGELX has garnered more than $2.75 billion in assets. The fund is currently managed by a team of investment professionals.

Performance

Obviously, what investors are looking for in these funds is strong performance relative to their peers. VGELX has a 5-year annualized total return of -1.75% 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 -14.1%, 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. The standard deviation of VGELX over the past three years is 27.83% compared to the category average of 28.69%. Looking at the past 5 years, the fund's standard deviation is 23.82% compared to the category average of 24.23%. 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 1.28, which means it is hypothetically more 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. VGELX's 5-year performance has produced a negative alpha of -17.6, which means managers in this portfolio find it difficult to pick 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, VGELX is a no load fund. It has an expense ratio of 0.27% compared to the category average of 1.54%. Looking at the fund from a cost perspective, VGELX is actually cheaper than its peers.

This fund requires a minimum initial investment of $50,000, and each subsequent investment should be at least $1.

Bottom Line

Overall, Vanguard Energy Admiral ( VGELX ) has a neutral Zacks Mutual Fund rank, and in conjunction with its comparatively strong performance, average downside risk, and lower fees, Vanguard Energy Admiral ( VGELX ) looks like a somewhat average choice for investors right now.

For additional information on the Sector - Energy area of the mutual fund world, make sure to check out www.zacks.com/funds/mutual-funds. There, you can see more about the ranking process, and dive even deeper into VGELX too 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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