Is Vanguard Extended Market Index Admiral (VEXAX) a Strong Mutual Fund Pick Right Now?
There are plenty of choices in the Small Cap Blend category, but where should you start your research? Well, one fund that might be worth investigating is Vanguard Extended Market Index Admiral (VEXAX). While this fund is not tracked by the Zacks Mutual Fund Rank, we were able to examine other factors like performance, volatility, and cost.
Objective
VEXAX is one of many Small Cap Blend funds to choose from. Small Cap Blend mutual funds allow investors a way to diversify their funds among various types of small-cap stocks. These funds seek companies with market capitalization of less than $2 billion, and aid in reducing volatility inherent in lower market cap stocks.
History of Fund/Manager
Vanguard Group is based in Malvern, PA, and is the manager of VEXAX. Vanguard Extended Market Index Admiral debuted in November of 2000. Since then, VEXAX has accumulated assets of about $29.81 billion, according to the most recently available information. The fund is currently managed by Donald Butler who has been in charge of the fund since November of 2000.
Performance
Obviously, what investors are looking for in these funds is strong performance relative to their peers. This fund carries a 5-year annualized total return of 18%, and it sits in the top third among its category peers. Investors who prefer analyzing shorter time frames should look at its 3-year annualized total return of 17.62%, 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. Over the past three years, VEXAX's standard deviation comes in at 25.37%, compared to the category average of 15.33%. The fund's standard deviation over the past 5 years is 20.34% compared to the category average of 12.72%. This makes the fund more volatile than its peers over the past half-decade.
Risk Factors
Investors should note that the fund has a 5-year beta of 1.25, so it is likely going to be more volatile than the market at large. Alpha is an additional metric to take into consideration, since it represents a portfolio's performance on a risk-adjusted basis relative to a benchmark, which in this case, is the S&P 500. The fund has produced a negative alpha over the past 5 years of -2.36, which shows that managers in this portfolio find it difficult to pick securities that generate better-than-benchmark returns.
Holdings
Examining 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 largely on equities that are traded in the United States.
Right now, 82.31% of this mutual fund's holdings are stocks, with an average market capitalization of $15.34 billion. The fund has the heaviest exposure to the following market sectors:
Technology
Finance
Other
Turnover is 19%, 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, VEXAX is a no load fund. It has an expense ratio of 0.06% compared to the category average of 0.99%. VEXAX is actually cheaper than its peers when you consider factors like cost.
This fund requires a minimum initial investment of $3,000, and each subsequent investment should be at least $1.
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. If you are more of a stock investor, make sure to also check out our Zacks Rank, and our full suite of tools we have available for novice and professional investors alike.
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