Is VWEAX a Strong Bond Fund Right Now?

On the lookout for a High Yield - Bonds fund? Starting with Vanguard High-Yield Corporate Admiral (VWEAX) is one possibility. VWEAX bears a Zacks Mutual Fund Rank of 2 (Buy), which is based on various forecasting factors like size, cost, and past performance.

Objective

VWEAX is part of the High Yield - Bonds section, which is a segment that boasts many possible options. Often referred to as " junk " bonds, High Yield - Bonds funds sit below investment grade, meaning they are at a high default risk compared to their investment grade peers. However, one advantage to junk bonds is that they generally pay out higher yields while posing similar interest rate risks to their investment grade counterparts.

History of Fund/Manager

Vanguard Group is based in Malvern, PA, and is the manager of VWEAX. Vanguard High-Yield Corporate Admiral made its debut in November of 2001, and since then, VWEAX has accumulated about $20.57 billion in assets, per the most up-to-date date available. 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. This fund in particular has delivered a 5-year annualized total return of 4.16%, 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 1.73%, 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. Compared to the category average of 10.86%, the standard deviation of VWEAX over the past three years is 8.15%. The standard deviation of the fund over the past 5 years is 8.64% compared to the category average of 12.23%. This makes the fund less volatile than its peers over the past half-decade.

This fund has a beta of 0.32, meaning that it is less volatile than a broad market index of fixed income securities. Taking this into account, VWEAX has a positive alpha of 3.38, which measures performance on a risk-adjusted basis.

Ratings

Investors should also consider a bond's rating, which is a grade ( 'AAA' to 'D' ) given to a bond that indicates its credit quality. With this letter scale in mind, VWEAX 's junk bond component-bonds rated 'BB' or below-is at 84%. This means that the fund has an average quality of BBB, and focuses on medium quality securities.

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 0.93%. Looking at the fund from a cost perspective, VWEAX is actually cheaper than its peers.

Investors need to be aware that with this product, the minimum initial investment is $50,000; each subsequent investment needs to be at least $1.

Fees charged by investment advisors have not been taken into considiration. 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 strong performance, average downside risk, and lower fees, this fund looks like a good potential choice for investors right now.

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