Having trouble finding a Sector - Energy fund?adam d tihany Vanguard Energy Admiral (VGELX) is a potential starting point. VGELX possesses a Zacks Mutual Fund Rank of 2 (Buy), which is based on nine forecasting factors like size, cost, and past performance.

Objective

Zacks categorizes VGELX as Sector - Energy, a segment packed with options. Sector - Energy mutual funds encompass a wide range of vastly changing and vitally important industries throughout this massive global sector. Oil and gas comprise the bulk of the exposure here, and carbon-based fuels are going to be the majority of assets in these funds. However, clean energy is starting to pick up steam.

History of Fund/Manager

Vanguard Group is based in Malvern, PA, and is the manager of VGELX. Since Vanguard Energy Admiral made its debut in November of 2001, VGELX has garnered more than $5.07 billion in assets. A team of investment professionals is the fund's current manager.

Performance

Investors naturally seek funds with strong performance. This fund in particular has delivered a 5-year annualized total return of -5.16%, and is 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 4.44%, which places it in the top third during this time-frame.

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 14.75%, the standard deviation of VGELX over the past three years is 17.6%. Looking at the past 5 years, the fund's standard deviation is 19.04% compared to the category average of 15.02%. This makes the fund more volatile than its peers over the past half-decade.

Risk Factors

Investors cannot discount the risks to this segment though, as it is always important to remember the downside for any potential investment. In VGELX's case, the fund lost 48.41% in the most recent bear market and outperformed its peer group by 6.91%. This makes the fund a possibly better choice than its peers during a sliding market environment.

Investors should not forget about beta, an important way to measure a mutual fund's risk compared to the market as a whole. VGELX has a 5-year beta of 1.03, which means it is likely to be as volatile as the market average. Because alpha represents a portfolio's performance on a risk-adjusted basis relative to a benchmark, which is the S&P 500 in this case, one should pay attention to this metric as well. With a negative alpha of -11.79, managers in this portfolio find it difficult to pick securities that generate better-than-benchmark returns.

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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, VGELX is a no load fund. It has an expense ratio of 0.31% compared to the category average of 1.49%. So, VGELX is actually cheaper than its peers from a cost perspective.

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.

Bottom Line

Overall, Vanguard Energy Admiral ( VGELX ) has a high Zacks Mutual Fund rank, and in conjunction with its comparatively strong performance, average downside risk, and lower fees, Vanguard Energy Admiral ( VGELX ) looks like a good potential choice for investors right now.

For additional information on this product, or to compare it to other mutual funds in the Sector - Energy, make sure to go to www.zacks.com/funds/mutual-funds for additional information. If you want to check out our stock reports as well, make sure to go to Zacks.com to see all of the great tools we have to offer, including our time-tested Zacks Rank.

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