The Vanguard Explorer Investor Class Fund (MUTF: VEXPX) is what the name implies: a mutual fund made up of small emerging companies exploring new opportunities and markets. This makes it an exciting (though slightly aggressive) mutual fund investment.

Because the companies in the Vanguard Explorer fund are growing, typically most of the companies’ earnings are plowed back into the companies — so don’t expect dividends. There’s no guarantee that the next Apple (NASDAQ: AAPL), Google (NASDAQ: GOOG) or Netflix (NASDAQ: NFLX) will be among the fund’s holdings, but the potential is always there.

Here are the specifics for the Vanguard Explorer Fund for today’s mutual fund spotlight:

Investing Strategy: The Vanguard Explorer Investor Class Fund invests in small and start-up companies considered to have superior growth potential.  It may appeal to long term aggressive investors, willing to take a chance on trendsetters. 98% of the fund’s assets are invested in common stocks and 2% is held in cash.

Expense Ratio: With a 0.49% expense ratio, the Vanguard Explorer Investor Class Fund is considerably cheaper than other funds in the category, but it has a $75 transaction fee. It has a Morningstar rating of 3 stars.

Top 5 Holdings: The top five stocks in the Vanguard Explorer Investor Class Fund include CMT Market Liquidity Rate at 1.97%, electronic payment provider VeriFone Systems, Inc. (NYSE: PAY) at 1.13%, small cap index fund Vanguard Small Cap ETF (NYSE: VB) at 0.87%, database marketer, Alliance Data Systems Corporation (NYSE: ADS)at 0.87%, and medical products provider Cooper Companies (NYSE: COO) at 0.82%.

Returns: The fund’s 12-month return of 35% outperformed the 23% Dow Jones Industrial Average’s 23% return during the same period. However, its 5-year return of about 0.09% dramatically underperformed the Dow Jones Industrial Average’s 11%, return, and the S&P 500’s 4% return during that same period. That the feast and famine you may find in this small-cap fund.

Other Fund Statistics

• Total Assets: $10.9 billion (as of 5/24/11)
• Minimum Investment: $3,000
• Fund managers: James Troyer, with Vanguard Explorer since February 2006; Edward Antoian, August 1997; Kenneth Abrams February 1994; John Heffern, December 2006; John Granahan, February 1990; Alexander Thorndike, June 2008, Ford Draper Jr. February 2005