If you're looking for a Small Cap Blend fund category, then a possible option is Vanguard Extended Market Index Admiral (VEXAX). The fund does not have a Zacks Mutual Fund Rank, though we have been able to explore other metrics like performance, volatility, and cost.
Objective
Zacks categorizes VEXAX as Small Cap Blend, which is an area packed with options. Usually targeting stocks with market caps of less than $2 billion, a Small Cap Blend mutual fund lets investors diversify their funds among other kinds of small-cap equities. This can help reduce risk found in companies that have a lower stock market valuation.
History of Fund/Manager
Vanguard Group is based in Malvern, PA, and is the manager of VEXAX. Vanguard Extended Market Index Admiral made its debut in November of 2000, and since then, VEXAX has accumulated about $25.55 billion in assets, per the most up-to-date date available. William Coleman is the fund's current manager and has held that role since November of 2017.
Performance
Of course, investors look for strong performance in funds. This fund carries a 5-year annualized total return of 9.89%, and is 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 2.53%, which places it in the bottom 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. Compared to the category average of 15.38%, the standard deviation of VEXAX over the past three years is 22.72%. Looking at the past 5 years, the fund's standard deviation is 24.5% compared to the category average of 16.47%. This makes the fund more volatile than its peers over the past half-decade.
Risk Factors
Investors should not forget about beta, an important way to measure a mutual fund's risk compared to the market as a whole. VEXAX has a 5-year beta of 1.21, which means it is likely to be more volatile than 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. The fund has produced a negative alpha over the past 5 years of -5.41, which shows that managers in this portfolio find it difficult to pick securities that generate better-than-benchmark returns.
Holdings
Investigating the equity holdings of a mutual fund is also a valuable exercise. This can show us how the manager is applying their stated methodology, as well as if there are any inherent biases in their approach. For this particular fund, the focus is primarily on equities that are traded in the United States.
As of the last filing date, the mutual fund has 75.36% of its assets in stocks, and these companies have an average market capitalization of $12.63 billion. The fund has the heaviest exposure to the following market sectors:
- Technology
- Finance
- Industrial Cyclical
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, VEXAX is a no load fund. It has an expense ratio of 0.06% compared to the category average of 0.94%. VEXAX is actually cheaper than its peers when you consider factors like cost.
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.
Fees charged by investment advisors have not been taken into considiration. Returns would be less if those were included.
Bottom Line
This could just be the start of your research on VEXAXin the Small Cap Blend category. Consider going to www.zacks.com/funds/mutual-funds for additional information about this fund, and all the others that we rank as well for additional information. Want to learn even more? We have a full suite of tools on stocks that you can use to find the best choices for your portfolio too, no matter what kind of investor you are.
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