Today we feature the mutual fund lineup of Vanguard small-cap stock funds.
Investors that buy small-cap stock funds are typically looking for long-term growth that has the potential to outperform broad market indices, such as the S&P 500 index. That potential for higher returns also brings with it the potential for greater volatility, which means that investors that buy these aggressive-style mutual funds should have a high tolerance for risk.
The set of seven mutual funds covers the primary ground of the small-cap stock universe, representing the key styles of small-cap growth, small-cap value, and small-cap blend.
As a note, these Vanguard funds offer a choice of index or actively managed, as well as a tax-managed offering. Minimum initial investment is $3,000 unless otherwise noted.
Vanguard Small-Cap Stock Funds
Vanguard Explorer (MUTF:VEXPX): This small-cap mutual fund is one of Vanguard’s actively managed offerings that has a long track record of solid performance. It’s also one of the oldest mutual funds on the market with a history that spans nearly 60 years and an average annualized return of 9% since inception. The VEXPX portfolio includes approximately 600 small-cap stocks with growth potential. The fund’s expense ratio is 0.46%, or $46 for every $10,000 invested.
Vanguard Explorer Value (MUTF:VEVFX): Vanguard’s VEVFX is an actively-managed fund that focuses on small- and mid-cap stocks that the management believes to be under-valued by the market. Like its Vanguard cousin, VEXPX, this fund employs more than one management team to effectively cover a specialized space of small-caps. The fund holds about 120 stocks, which is a good number of holdings in a portfolio to be diversified yet sufficiently concentrated in small-cap value stocks. The fund’s expense ratio is 0.63%.
Vanguard Small-Cap Growth Index (MUTF:VISGX): Investors looking for a low-cost, passively-managed mutual fund with focused exposure to small-cap growth stocks will like what they find in Vanguard’s VISGX. This small-cap index fund tracks the CRSP US Small Cap Growth Index, which covers 675 small-cap growth stocks. The expense ratio is low at 0.2%.
Vanguard Small-Cap Index (MUTF:NAESX): This small-cap mutual fund is ideal for investors wanting broad exposure to the small-cap market. NAESX is an index fund that passively tracks the CRSP US Small Cap Index, which includes over 1,400 small-caps in both the growth and value styles, which makes NAESX a small-cap blend fund. The expense ratio is just 0.2%.
Vanguard Small-Cap Value Index (MUTF:VISVX): Vanguard’s VISVX focuses on the value style of stocks in the small-cap market. Investors buying funds like VISVX are typically looking for a basket of small-caps that are undervalued in the market. To achieve its objective, VISVX passively tracks the CRSP US Small Cap Value Index, which covers over 800 small-cap value stocks. Expenses for VISVX are 0.2%.
Vanguard Strategic Small-Cap Equity (MUTF:VSTCX): Investors looking for a low-cost, actively-managed fund that offers broad exposure to small-cap stocks will like what they see in VSTCX. The fund’s objective is to hold small caps in the benchmark, MSCI US Small-Cap 1750 Index, but to take an extra strategic step by holding only those small-caps in the index that have potential to outperform the benchmark average. Expenses for VSTCX are 0.29%.
Vanguard Tax-Managed Small-Cap (MUTF:VTMSX): One of the mutual funds in Vanguard’s tax-managed offerings, VTMSX management attempts to track the S&P 600 Small-Cap Index while minimizing taxable gains in the portfolio. This fund can be a smart choice for investors wanting a diversified small-cap fund for a taxable account. Expenses for VTMSX are a mere 0.11%. This fund is only offered as an Admiral share class, which means investors will need to put up $10,000 or more for their first purchase.
As of this writing, Kent Thune did not personally hold a position in any of the aforementioned securities.His No. 1 holding is his privately held investment advisory firm. Under no circumstances does this information represent a recommendation to buy or sell securities.