Are you on the hunt for a Target Date fund? You should think about starting with Vanguard Target Retirement 2025 Fund (VTTVX). VTTVX has no Zacks Mutual Fund Rank, but we have been able to look into other metrics like performance, volatility, and cost.
History of Fund/Manager
Vanguard Group is based in Malvern, PA, and is the manager of VTTVX. Vanguard Target Retirement 2025 Fund debuted in October of 2003. Since then, VTTVX has accumulated assets of about $41.27 billion, according to the most recently available information. The fund is currently managed by William Coleman who has been in charge of the fund since February of 2013.
Investors naturally seek funds with strong performance. VTTVX has a 5-year annualized total return of 9.61% and it sits in the top third among its category peers. If you’re interested in shorter time frames, do not dismiss looking at the fund’s 3-year annualized total return of 9.86%, 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. VTTVX’s standard deviation over the past three years is 11.55% compared to the category average of 11.09%. The standard deviation of the fund over the past 5 years is 9.3% compared to the category average of 8.95%. This makes the fund more volatile than its peers over the past half-decade.
With a 5-year beta of 0.59, the fund is likely to be less volatile than the market average. Because alpha represents a portfolio’s performance on a risk-adjusted basis relative to a benchmark, which is the S&P 500 in this case, one should pay attention to this metric as well. VTTVX’s 5-year performance has produced a negative alpha of -0.75, which means managers in this portfolio find it difficult to pick securities that generate better-than-benchmark returns.
For investors, taking a closer look at cost-related metrics is key, since costs are increasingly important for mutual fund investing. Competition is heating up in this space, and a lower cost product will likely outperform its otherwise identical counterpart, all things being equal. In terms of fees, VTTVX is a no load fund. It has an expense ratio of 0.13% compared to the category average of 0.49%. Looking at the fund from a cost perspective, VTTVX is actually cheaper than its peers.
This fund requires a minimum initial investment of $1,000, and each subsequent investment should be at least $1.
For additional information on this product, or to compare it to other mutual funds in the Target Date, 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.