There are plenty of choices in the Government Mortgage - Intermediate category, but where should you start your research? Well, one fund that might be worth investigating is Vanguard GNMA Investor (VFIIX). VFIIX carries a Zacks Mutual Fund Rank of 1 (Strong Buy), which is based on various forecasting factors like size, cost, and past performance.

Objective

VFIIX is one of many Government Mortgage - Intermediate funds to choose from. Government Mortgage - Intermediate funds focus on the mortgage-backed securities (MBS) market. This market takes mortgages, packages them together, and sells off the pooled securities to investors. This particular category focuses on MBS that usually have at least three years to maturity, but less than 10, giving a medium risk and yield profile to funds here.

History of Fund/Manager

Vanguard Group is based in Malvern, PA, and is the manager of VFIIX. Since Vanguard GNMA Investor made its debut in June of 1980, VFIIX has garnered more than $5.08 billion in assets. The fund is currently managed by Brian Conroy who has been in charge of the fund since May of 2019.

Performance

Obviously, what investors are looking for in these funds is strong performance relative to their peers. VFIIX has a 5-year annualized total return of -0.14% and it sits in the middle third among its category peers. But if you are looking for a shorter time frame, it is also worth looking at its 3-year annualized total return of -1.45%, which places it in the top 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. VFIIX's standard deviation over the past three years is 7.77% compared to the category average of 38%. Over the past 5 years, the standard deviation of the fund is 6.11% compared to the category average of 10%. This makes the fund less volatile than its peers over the past half-decade.

VFIIX carries a beta of 1.02, 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 -0.26, 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, VFIIX is a no load fund. It has an expense ratio of 0.21% compared to the category average of 1%. From a cost perspective, VFIIX is actually cheaper than its peers.