Is VWEAX a Strong Bond Fund Right Now?

Any investors hoping to find a High Yield - Bonds fund could think about starting with Vanguard High-Yield Corporate Admiral (VWEAX). VWEAX carries a Zacks Mutual Fund Rank of 2 (Buy), which is based on various forecasting factors like size, cost, and past performance.

Objective

VWEAX is classified in the High Yield - Bonds segment by Zacks, an area full of investment possibilities. High Yield - Bonds funds come in below investment grade, and are referred to as "junk" bonds for this reason. Compared to their investment grade peers, these funds are at a higher default risk, but typically pay out higher yields while posing similar interest rate risks.

History of Fund/Manager

VWEAX is a part of the Vanguard Group family of funds, a company based out of Malvern, PA. Vanguard High-Yield Corporate Admiral debuted in November of 2001. Since then, VWEAX has accumulated assets of about $22.87 billion, according to the most recently available information. Michael Chang is the fund's current manager and has held that role since August of 2022.

Performance

Of course, investors look for strong performance in funds. VWEAX has a 5-year annualized total return of 3.86%, 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 7.65%, which places it in the middle 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. Over the past three years, VWEAX's standard deviation comes in at 4.25%, compared to the category average of 7.56%. Looking at the past 5 years, the fund's standard deviation is 6.61% compared to the category average of 9.47%. This makes the fund less volatile than its peers over the past half-decade.

Bond Duration

Modified duration is a measure of a given bond's interest rate sensitivity, so when judging how fixed income securities will respond in a shifting rate environment, it is an excellent figure to look at.

For those that believe interest rates will rise, this is an important factor to consider. VWEAX has a modified duration of 3.2, which suggests that the fund will decline 3.2% for every hundred-basis-point increase in interest rates.

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, VWEAX is a no load fund. It has an expense ratio of 0.12% compared to the category average of 0.90%. From a cost perspective, VWEAX 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.

Fees charged by investment advisors have not been taken into consideration. Returns would be less if those were included.

Bottom Line

Overall, Vanguard High-Yield Corporate Admiral ( VWEAX ) has a high Zacks Mutual Fund rank, and in conjunction with its comparatively similar performance, average downside risk, and lower fees, Vanguard High-Yield Corporate Admiral ( VWEAX ) looks like a good potential choice for investors right now.

Don't stop here for your research on High Yield - Bonds funds. We also have plenty more on our site in order to help you find the best possible fund for your portfolio. Make sure to check out www.zacks.com/funds/mutual-funds for more information about the world of funds, and feel free to compare VWEAX to its peers as well 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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