If you've been stuck searching for Small Cap Blend funds, consider Vanguard Small-Cap Growth Index Admiral (VSGAX) as a possibility. VSGAX has no Zacks Mutual Fund Rank, but we have been able to look into other metrics like performance, volatility, and cost.
Objective
We classify VSGAX in the Small Cap Blend category, an area rife with potential choices. Small Cap Blend mutual funds usually target companies with a market capitalization of less than $2 billion. A small-cap blend mutual fund allows investors to diversify their funds among various types of small-cap stocks, which can help reduce the volatility inherent in lower market cap companies.
History of Fund/Manager
Vanguard Group is based in Malvern, PA, and is the manager of VSGAX. Since Vanguard Small-Cap Growth Index Admiral made its debut in September of 2011, VSGAX has garnered more than $15.78 billion in assets. The fund's current manager is a team of investment professionals.
Performance
Obviously, what investors are looking for in these funds is strong performance relative to their peers. This fund has delivered a 5-year annualized total return of 4.39%, and it sits in the middle third among its category peers. Investors who prefer analyzing shorter time frames should look at its 3-year annualized total return of 17.05%, which places it in the middle 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. VSGAX's standard deviation over the past three years is 18.64% compared to the category average of 14.09%. Looking at the past 5 years, the fund's standard deviation is 20.54% compared to the category average of 15.55%. This makes the fund more volatile than its peers over the past half-decade.
Risk Factors
With a 5-year beta of 1.18, the fund is likely to be more volatile than the market average. Another factor to consider is alpha, as it reflects a portfolio's performance on a risk-adjusted basis relative to a benchmark-in this case, the S&P 500. Over the past 5 years, the fund has a negative alpha of -9.15. This means 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 mostly on equities that are traded in the United States.
As of the last filing date, the mutual fund has 77.51% of its assets in stocks, with an average market capitalization of $15.89 billion. The fund has the heaviest exposure to the following market sectors:
Technology Industrial Cyclical HealthTurnover is 36%, which means, on average, the fund makes fewer trades than comparable funds.
Expenses
For investors, taking a closer look at cost-related metrics is key, since costs are increasingly important for mutual fund investing. Competition is heating up in this space, and a lower cost product will likely outperform its otherwise identical counterpart, all things being equal. In terms of fees, VSGAX is a no load fund. It has an expense ratio of 0.07% compared to the category average of 1.01%. From a cost perspective, VSGAX is actually cheaper than its peers.
This fund requires a minimum initial investment of $3,000, and each subsequent investment should be at least $1.
Fees charged by investment advisors have not been taken into consideration. Returns would be less if those were included.
Bottom Line
This could just be the start of your research on VSGAX in 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. For analysis of the rest of your portfolio, make sure to visit Zacks.com for our full suite of tools which will help you investigate all of your stocks and funds in one place.
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This article originally published on Zacks Investment Research (zacks.com).