uploads/uploads///Vanguard Morgan Growth Fund %E%% Investor Shares Vs Peers

An Above-Average One-Year Period for Vanguard Morgan Growth Fund


Mar. 25 2016, Updated 2:07 p.m. ET

Vanguard Morgan Growth Fund performance

In this article, we’ll specifically outline the performance of the Vanguard Morgan Growth Fund – Investor Shares (VMRGX). The fund is invested in stocks of companies like Nike (NKE), Netflix (NFLX), The Walt Disney Company (DIS), Cardinal Health (CAH), and Vantiv (VNTV).

From a purely NAV (net asset value) return standpoint, the VMRGX was placed third among its peer group in the one-year period ended March 18, 2016. When we refer to the peer group, we mean the group of 12 funds chosen for this review. For return comparison, we have chosen two ETFs: the Vanguard 500 ETF (VOO) and the iShares Russell 1000 Growth ETF (IWF).

For evaluating benchmark-related metrics, we’ve chosen the S&P 500 as the benchmark for all funds in this review, which VOO tracks.

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Other metrics

VMRGX’s standard deviation, or the volatility of returns, in the one-year period until March 18 was 18.0%. This is much higher than the S&P 500’s 16.7%, but a little lower than the peer group’s average of 18.4%.

The fund’s risk-adjusted returns, calculated via the Sharpe Ratio, were negative for the one-year period ended March 18. Evaluating a negative Sharpe Ratio may be misleading, so we’ll avoid that. The ratio for 2015 had placed VMRGX fourth among its peers.

The information ratio, calculated with the S&P 500 as the benchmark, was negative for the one-year period ended March 18. Like the Sharpe Ratio, we can’t evaluate a negative information ratio. The information ratio shows the consistency of a fund manager along with measuring his or her ability to generate excess returns over a benchmark. The higher the reading, the better the consistency. For 2015, the fund’s information ratio had ranked third.

A note to investors

The VMRGX’s alpha has placed it third among its peers for the one-year period ended March 18, 2016. For 2015, its alpha was placed sixth. The fund’s metrics are mixed and warrant a longer-term analysis in order to assess its performance over various economic cycles. Its unique management style may also appeal to some investors. Those already invested may wish to wait a bit more before taking a call on their allocation to the fund.

In the final article of the series, we’ll look at the overall picture that emerges from this analysis.


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