If investors are looking at the Mutual Fund Bond fund category, Vanguard Intermediate-Term Tax-Exempt Investor (VWITX Quick QuoteVWITX - Free Report) could be a potential option. VWITX possesses a Zacks Mutual Fund Rank of 1 (Strong Buy), which is based on various forecasting factors like size, cost, and past performance.

History of Fund/Manager

VWITX is a part of the Vanguard Group family of funds, a company based out of Malvern, PA. Since Vanguard Intermediate-Term Tax-Exempt Investor made its debut in September of 1977, VWITX has garnered more than $2.49 billion in assets. James D'Arcy is the fund's current manager and has held that role since June of 2013.

Performance

Obviously, what investors are looking for in these funds is strong performance relative to their peers. VWITX has a 5-year annualized total return of 2.11% and it sits 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 0.97%, 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 11.7%, the standard deviation of VWITX over the past three years is 5.55%. Looking at the past 5 years, the fund's standard deviation is 4.8% compared to the category average of 10.14%. This makes the fund less volatile than its peers over the past half-decade.

This fund has a beta of 0.77, meaning that it is less volatile than a broad market index of fixed income securities. Taking this into account, VWITX has a positive alpha of 0.1, which measures performance on a risk-adjusted basis.

Ratings

Investors should also consider a bond's rating, which is a grade ( 'AAA' to 'D' ) given to a bond that indicates its credit quality. With this letter scale in mind, VWITX has 59.48% in high quality bonds rated at least 'AA' or higher, while 35.62% are of medium quality, with ratings of 'A' to 'BBB'. The fund has an average quality of AA, and focuses on high quality securities.

Expenses

As competition heats up in the mutual fund market, costs become increasingly important. Compared to its otherwise identical counterpart, a low-cost product will be an outperformer, all other things being equal. Thus, taking a closer look at cost-related metrics is vital for investors. In terms of fees, VWITX is a no load fund. It has an expense ratio of 0.17% compared to the category average of 0.78%. So, VWITX is actually cheaper than its peers from a cost perspective.

While the minimum initial investment for the product is $3,000, investors should also note that each subsequent investment needs to be at least $1.

Bottom Line

Overall, Vanguard Intermediate-Term Tax-Exempt Investor ( VWITX ) has a high Zacks Mutual Fund rank, and in conjunction with its comparatively strong performance, better downside risk, and lower fees, this fund looks like a good potential choice for investors right now.

For additional information on the Mutual Fund Bond area of the mutual fund world, make sure to check out www.zacks.com/funds/mutual-funds. There, you can see more about the ranking process, and dive even deeper into VWITX too 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.