Is VUSTX a Strong Bond Fund Right Now?

On the lookout for a Government Bond - Long fund? Starting with Vanguard Long-Term Treasury Investor VUSTX is one possibility. VUSTX holds a Zacks Mutual Fund Rank of 2 (Buy), which is based on various forecasting factors like size, cost, and past performance.

Objective

Zacks categorizes VUSTX as Government Bond - Long, which is an area packed with options. In their portfolios, Government Bond - Long funds hold securities issued by the United States' federal government, which are often seen as risk-free assets and described as extremely low-risk from a default perspective. Focusing on the long end of the curve, this fund category results in higher yields, but greater sensitivity to interest rate fluctuations.

History of Fund/Manager

Vanguard Group is responsible for VUSTX, and the company is based out of Malvern, PA. Vanguard Long-Term Treasury Investor debuted in May of 1986. Since then, VUSTX has accumulated assets of about $609.18 million, according to the most recently available information. John Madziyire is the fund's current manager and has held that role since November of 2021.

Performance

Investors naturally seek funds with strong performance. This fund carries a 5-year annualized total return of -3.67%, 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 -10.78%, 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. The standard deviation of VUSTX over the past three years is 15.75% compared to the category average of 15.08%. Over the past 5 years, the standard deviation of the fund is 15.53% compared to the category average of 15.68%. This makes the fund less volatile than its peers over the past half-decade.

VUSTX carries a beta of 2.25, meaning that the fund is more volatile than a broad market index of fixed income securities. With this in mind, it has a negative alpha of -0.09, which measures performance on a risk-adjusted basis.

Expenses

Costs are increasingly important for mutual fund investing, and particularly as competition heats up in this market. And all things being equal, a lower cost product will outperform its otherwise identical counterpart, so taking a closer look at these metrics is key for investors. In terms of fees, VUSTX is a no load fund. It has an expense ratio of 0.20% compared to the category average of 0.61%. Looking at the fund from a cost perspective, VUSTX is actually cheaper than its peers.

Investors need to be aware that with this product, the minimum initial investment is $3,000; 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 Long-Term Treasury Investor ( VUSTX ) 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.

Your research on the Government Bond - Long segment doesn't have to stop here.

To read this article on Zacks.com click here.