Is Vanguard Capital Value Investor (VCVLX) a great choice for mutual funds right now?

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Having trouble finding a Mid Cap Value fund? Vanguard Capital Value Investor (VCVLX) is a potential starting point. VCVLX has a Zacks mutual fund rank of 2 (buy), which is based on nine forecasting factors such as size, cost, and past performance.

Goal

We rank VCVLX in the Mid Cap Value category, an area rich in potential choices. Mid Cap Value mutual funds aim to target mid-sized companies that present strong value and income opportunities for investors. A mid-cap company typically has a market cap of between $ 2 billion and $ 10 billion.

Fund / manager history

Vanguard Group is based in Malvern, PA, and is the director of VCVLX. Vanguard Capital Value Investor debuted in December 2001. Since then, VCVLX has accumulated assets of approximately $ 741.10 million, according to the latest information available. The current fund manager, David W. Palmer, has been in charge of the fund since December 2009.

Performance

Investors naturally look for high performance funds. This particular fund generated a 5-year total annualized return of -0.8% and is in the bottom third of its category peers. But if you’re looking for a shorter time frame, it’s also worth looking at its 3-year annualized total return of 5.22%, which puts it in the middle third during that time.

When looking at the performance of a fund, it is also important to note the standard deviation of returns. The lower the standard deviation, the less volatility the fund experiences. Compared to the category average of 13.09%, the standard deviation of VCVLX over the past three years is 14.14%. Over the past 5 years, the fund’s standard deviation is 16.32% compared to the category average of 13.29%. This makes the fund more volatile than its peers over the past half decade.

Risk factors

Investors cannot ignore the risks of this segment, however, as it is always important to remember the downsides of any potential investment. In the most recent bear market, VCVLX lost 62.68% and underperformed its peer group by 11.13%. This makes the fund perhaps a worse choice than its peers in a declining market environment.

Nonetheless, investors should also note that the fund has a 5-year beta of 1.22, which means it is hypothetically more volatile than the market as a whole. Since alpha represents the performance of a portfolio on a risk-adjusted basis relative to a benchmark, which is the S&P 500 in this case, it is worth paying attention to this metric as well. With a negative alpha of -10.83, the managers of this portfolio find it difficult to select stocks that generate returns above the benchmark.

Holdings

Investigating the stock holdings of a mutual fund is also a valuable exercise. This can show us how the manager applies his stated methodology, as well as whether there are inherent biases in his approach. For this particular fund, the focus is primarily on stocks traded in the United States.

This fund currently owns around 87.49% of equities, and these companies have an average market capitalization of $ 57.90 billion. The fund has the most exposure to the following market sectors:

  1. Technology

  2. Finance

The turnover is 92%, which means that this fund carries out fewer transactions than comparable funds.

Expenses

The costs are increasingly important for investing in mutual funds, and particularly as competition intensifies in this market. And all else being equal, a lower-cost product will outperform its otherwise identical counterpart, so it’s critical for investors to take a closer look at these metrics. In terms of fees, VCVLX is a no-load fund. It has an expense ratio of 0.28% compared to the category average of 1.14%. From a cost perspective, VCVLX is actually less expensive than its peers.

Although the minimum initial investment for the product is $ 3,000, investors should also note that each subsequent investment must be at least $ 1.

Final result

Overall, Vanguard Capital Value Investor (VCVLX) ranks high for Zacks mutual fund, poor performance, medium downside risk, and lower fees than its peers.

This might just be the start of your search for VCVLX under the Mid Cap Value category. Consider going to www.zacks.com/funds/mutual-funds for more information on this fund, and all the others that we rank for more information as well. Zacks provides a full suite of tools to help you analyze your portfolio – both funds and stocks – in the most efficient way possible.

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