Is Vanguard Small-Cap Value Index Admiral (VSIAX) a Strong Mutual Fund Pick Right Now?
Have you been searching for a Small Cap Value fund? You might want to begin with Vanguard Small-Cap Value Index Admiral (VSIAX). 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
The world of Small Cap Value mutual funds is an area filled with options, such as VSIAX. Small Cap Value funds invest in small companies with stock market valuation less than $2 billion. These funds offer more bang for an owner's buck, providing low P/E ratios, high dividend yields, and better-than-average P/S ratios.
History of Fund/Manager
Vanguard Group is based in Malvern, PA, and is the manager of VSIAX. Vanguard Small-Cap Value Index Admiral debuted in September of 2011. Since then, VSIAX has accumulated assets of about $19.52 billion, according to the most recently available information. The fund's current manager, Gerard O'Reilly, has been in charge of the fund since April of 2016.
Performance
Of course, investors look for strong performance in funds. This fund carries a 5-year annualized total return of 8.98%, and it sits 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 7.19%, 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. The standard deviation of VSIAX over the past three years is 20.15% compared to the category average of 16.55%. The fund's standard deviation over the past 5 years is 23.77% compared to the category average of 18.41%. This makes the fund more volatile than its peers over the past half-decade.
Risk Factors
With a 5-year beta of 1.15, 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. With a negative alpha of -5.79, 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 primarily on equities that are traded in the United States.
The mutual fund currently has 96.3% of its holdings in stocks, which have an average market capitalization of $6.37 billion. The fund has the heaviest exposure to the following market sectors:
Finance
Industrial Cyclical
With turnover at about 14%, this fund is making fewer trades than the average comparable fund.
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, VSIAX is a no load fund. It has an expense ratio of 0.07% compared to the category average of 1.03%. From a cost perspective, VSIAX is actually cheaper than its peers.
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
Your research on the Small Cap Value segment doesn't have to stop here. You can check out all the great mutual fund tools we have to offer by going to www.zacks.com/funds/mutual-funds to see the additional features we offer as well for additional information. Zacks provides a full suite of tools to help you analyze your portfolio - both funds and stocks - in the most efficient way possible.
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