Vanguard Convertible Securities Fund (VCVSX)

Vanguard Convertible Securities Fund (Ticker: VCVSX) is another popular low cost balanced fund. It invests in U.S. and non-U.S. convertibles.

Vanguard Convertible Securities Investor (VCVSX)

The Vanguard Convertible Securities fund aim is to achieve current income and long-term capital appreciation. It utilizes its assets to purchase U.S. and foreign convertible securities. These convertibles are hybrid securities that have characteristics of bonds and common stocks. It may include corporate bonds and preferred stocks that are convertible into common stock, and debt securities with warrants or common stock attached.

Fund Profile

• Fund Inception Date: June 16, 1986
• Ticker Symbol: VCVSX
• CUSIP: 922023106
• Beta (3yr): 1.16
• Rank in category (YTD): 3%
• Category: Convertibles
• Distribution: 3.84%
• Capital Gains: 0%
• Expense Ratio: 0.59%
• Net Assets: $ 1.66 billion
• Number of Years Up: 18 years
• Number of Years Down: 7 years
• Average Duration: 4.3 years
• Average Maturity: 4.9 years
• Annual Turnover Rate: 90.00%

Updated on 11/16/2012

This Vanguard fund has total net assets of $1.66 billion. It is managed by Larry Keele since October 1996. Morningstar ranks it with 4-stars and Gold rating. Its 12-month dividend yield is 3.84%. The most recent distribution was given in June 2012 ($0.12). The expense ratio is 0.59% per year. This fee is much lower than the average in the Convertibles category (1.13%). The 3-year beta is 1.16. The current shares price (NAV) is $13.19.

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The 5-year annualized return of this convertibles fund is 4.65%. Since its inception in 1986, it has recorded in 18 years of positive return and 7 years of negative return. The best 1-year total return was recorded in 2009 with 40.81%. Based on the load adjusted returns, the performance of this fund is as follow:

• 1-year: 7.99%
• 3-year: 10.24%
• 5-year: 4.65%
• 10-year: 8.99%

Convertibles Composite Index and Dow Jones US Total Stock Market Index are the benchmarks of this fund. This Vanguard fund is available for purchase through 74 brokerages with the minimum first purchase of $3.000. They are E Trade Financial, Vanguard, T Rowe Price, Scottrade TF, Firstrade, JPMorgan, Royal Alliance, Raymond James, Securities America Advisors, etc.

As of July 2012, the top 10 holdings of this fund represent 19.8% of the total net assets. They are Micron Technology Inc, Gilead Sciences Inc, priceline.com Inc, Cemex SAB de CV, Omnicare Inc, SanDisk Corp, MGM Resorts International, United States Steel Corp, Hologic Inc and Nuance Communications Inc.

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If you are investing in this Vanguard Convertible Securities fund, you need to know about the investment risks. The risks are Stock market risk, interest rate risk, credit risk, manager risk, liquidity risk, country/ regional risk, etc.

Disclosure: No Position