VIGRX: performance evaluation
The Vanguard Growth Index Fund Investor Shares (VIGRX) is an above-average YTD (year-to-date) performer among the 12 funds we’ve chosen for review in this series. However, the past six months have not been good for the fund because it has landed among the bottom three. We’ve graphed its performance against two ETFs: the iShares S&P 500 Growth ETF (IVW) and the iShares Russell 1000 Growth ETF (IWF).
Let’s look at what specifically has contributed to VIGRX’s YTD performance.
Contribution to returns
Information technology has led all sectors in terms of positive contributions. Apple (AAPL) leads all gainers from the sector, followed by Facebook (FB) and QUALCOMM (QCOM). The absence of any major negative contributor has been a boon to the sector’s performance.
Energy has emerged as the second biggest positively contributing sector. EOG Resources (EOG), Pioneer Natural Resources (PXD), and Schlumberger (SLB) have fueled the sector’s contributions. Meanwhile, Union Pacific (UNP) has led the industrials sector up with help from 3M Co (MMM) and United Parcel Service (UPS).
The consumer discretionary sector, another major positive contributor, has been led up by Amazon.com (AMZN).
The healthcare sector has been the only sector weighing the fund down so far in 2016. Negative contributions from Gilead Sciences (GILD), Allergan (AGN), and Bristol-Myers Squibb (BMY) have driven down the sector’s returns.
VIGRX has done well YTD. Since it’s a passive fund, a comparison with the SPDR S&P 500 ETF (SPY) would be useful. But after figuring among the above average funds in our select group for this review, it’s clear that VIGRX has lagged behind SPY. While its components from the consumer discretionary, financials, information technology, and real estate sectors have outperformed the same in SPY, it has done worse than the ETF as far as the remaining sectors are concerned.
Still, VIGRX’s passive structure makes it a simple instrument for investment as far as mutual funds are concerned because you don’t need to worry about stock picking and fund manager performance. Another strength is its large asset size, and so the fund could be quite useful as a core holding.
Now let’s move on to the last US equity mutual fund under review in this series: the Vanguard PRIMECAP Fund Investor Shares (VPMCX).