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Is Vanguard Real Estate Index Fund Admiral (VGSLX) a Strong Mutual Fund Pick Right Now?

If you’re looking for a Mutual Fund Equity Report fund category, then a possible option is Vanguard Real Estate Index Fund Admiral (VGSLX). VGSLX 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 VGSLX. The Vanguard Real Estate Index Fund Admiral made its debut in November of 2001 and VGSLX has managed to accumulate roughly $22.37 billion in assets, as of the most recently available information. The fund is currently managed by Gerard O’Reilly who has been in charge of the fund since November of 2001.

Performance

Obviously, what investors are looking for in these funds is strong performance relative to their peers. This fund carries a 5-year annualized total return of 5.91%, and it sits in the middle third among its category peers. Investors who prefer analyzing shorter time frames should look at its 3-year annualized total return of 3.66%, which places it in the middle 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 VGSLX over the past three years is 21% compared to the category average of 17.33%. The fund’s standard deviation over the past 5 years is 18.49% compared to the category average of 15.26%. This makes the fund more volatile than its peers over the past half-decade.

Risk Factors

With a 5-year beta of 0.84, the fund is likely to be less volatile than the market average. 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. With a negative alpha of -3.42, managers in this portfolio find it difficult to pick securities that generate better-than-benchmark returns.

Expenses

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, VGSLX is a no load fund. It has an expense ratio of 0.12% compared to the category average of 0.79%. From a cost perspective, VGSLX is actually cheaper than its peers.

Investors should also note that the minimum initial investment for the product is $3,000 and that each subsequent investment needs to be at $1.

Bottom Line

For additional information on this product, or to compare it to other mutual funds in the Mutual Fund Equity Report, make sure to go to www.zacks.com/funds/mutual-funds for additional information. 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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