Vanguard is best known for its ultralow fees and index funds, but the Malvern, Pennsylvania-based firm also sponsors 70 actively managed mutual funds. Several are solid, but others are mediocre at best.
For example, the company’s target retirement fund lineup is a fine choice for most investors early in their careers, but once you’re in retirement, a 60%-40% split may be too aggressive for your needs.
The company is also in competition with many imitators, which puts pressure on its fund family’s expense ratios. It’s been a long time since Vanguard led the industry in cost, but that dominance appears to have run its course.
Regardless, the company remains a great choice for active investors thanks to its diversified holdings and low costs. Its mutual fund lineup is also a good choice for those who are interested in diversifying their portfolio with passive investments.
The Vanguard STAR Fund (VGSTX) is part of the Allocation Balanced category and has a Zacks Mutual Fund Rank of 1 (Strong Buy). This fund has returned 6.24 percent over the past year, 1.72 percent over three years and 5.80 percent over five years, outperforming its peers in these time frames. The fund’s beta is 0.68, meaning it is less volatile than the market as a whole. Its alpha is -1.9, which indicates that managers have found it difficult to pick securities that generate better-than-benchmark returns. The fund’s turnover is high, at 76.5%. This is an indication that the fund’s managers are frequently buying and selling shares of the underlying funds.