Recent market volatility and the acceleration of emerging-market outflows helped in deciding the fund of the week. The Vanguard Institutional Index Fund Institutional Plus Shares (VIIIX) is a vanilla large-cap equity blend that is passively managed. With $178 billion in assets under management, the primary focus of the fund is to track the S&P 500 and its constituents. Weightings in the fund are accordingly adjusted based on movements in the index.
Inside the Fund
Type of Fund
This fund only accepts institutional investors with a minimum investment of $200 million.
Donald Butler is the manager of the fund and his qualifications extend to a CFA accreditation and a BSBA degree from Shippensburg University. He has been with Vanguard since 1992 and has been managing the fund since 2009.
The fund’s year-to-date performance is a conservative 2.1%, which puts it in the 3rd quintile for the category. This is a fall from the previous year’s performance numbers when the fund sat in the 1st quintile. The S&P 500 in 2014 returned 11.39% (excluding dividends).
The fund has a dividend yield of 3.6% with a quarterly payment frequency. Payment months are March, June, September and December.
Portfolio Sector Weightings
Technology, health care and financial services sector weightings put the fund in the 1st quartile. Recent weakness in the energy and mining sectors have seen the weightings fall to 7.94% and 3.03% respectively.
Top 10 Holdings
The top holdings for the fund match that of the S&P 500, however the weightings are slightly different. According to the May S&P 500 constituent list, Microsoft is second only to Apple, and Procter and Gamble rounds out the top 10 in last position.
The Bottom Line
The VIIIX, although relatively vanilla in its portfolio breakdown, is an effective yield play and offers a base of consistency from a performance perspective. The management fees and expense ratio are also quite low at 0.04% (of AUM), which puts the fund in the top quartile.