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Is Vanguard Strategic Small Cap Equity (VSTCX) a Strong Mutual Fund Pick Right Now?
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If you've been stuck searching for Small Cap Blend funds, consider Vanguard Strategic Small Cap Equity (VSTCX - Free Report) as a possibility. VSTCX carries a Zacks Mutual Fund Rank of 1 (Strong Buy), which is based on nine forecasting factors like size, cost, and past performance.
Objective
VSTCX 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
VSTCX finds itself in the Vanguard Group family, based out of Malvern, PA. Since Vanguard Strategic Small Cap Equity made its debut in April of 2006, VSTCX has garnered more than $1.22 billion in assets. The fund's current manager, James P. Stetler, has been in charge of the fund since April of 2006.
Performance
Obviously, what investors are looking for in these funds is strong performance relative to their peers. VSTCX has a 5-year annualized total return of 3.14% and is in the bottom third among its category peers. Investors who prefer analyzing shorter time frames should look at its 3-year annualized total return of 0.52%, which places it in the bottom 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. The standard deviation of VSTCX over the past three years is 17.43% compared to the category average of 17.27%. The fund's standard deviation over the past 5 years is 16.44% compared to the category average of 16.49%. This makes the fund less volatile than its peers over the past half-decade.
Risk Factors
One cannot ignore the volatility of this segment, however, as it is always important for investors to remember the downside to any potential investment. In VSTCX's case, the fund lost 54.57% in the most recent bear market and underperformed comparable funds by 1%. This means that the fund could possibly be a worse choice than its peers during a down market environment.
Investors should note that the fund has a 5-year beta of 1.16, so it is likely going to be more volatile than the market at large. 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 -6.34. This means 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 primarily on equities that are traded in the United States.
As of the last filing date, the mutual fund has 97.05% of its assets in stocks, with an average market capitalization of $3.40 billion. The fund has the heaviest exposure to the following market sectors:
Finance
Technology
Turnover is 67%, which means this fund makes fewer trades than the average comparable fund.
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, VSTCX is a no load fund. It has an expense ratio of 0.26% compared to the category average of 1.10%. So, VSTCX is actually cheaper than its peers from a cost perspective.
Investors need to be aware that with this product, the minimum initial investment is $3,000; each subsequent investment needs to be at least $1.
Bottom Line
Overall, Vanguard Strategic Small Cap Equity ( VSTCX ) has a high Zacks Mutual Fund rank, and in conjunction with its comparatively weak performance, average downside risk, and lower fees, Vanguard Strategic Small Cap Equity ( VSTCX ) looks like a great potential choice for investors right now.
This could just be the start of your research on VSTCXin 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. 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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Is Vanguard Strategic Small Cap Equity (VSTCX) a Strong Mutual Fund Pick Right Now?
If you've been stuck searching for Small Cap Blend funds, consider Vanguard Strategic Small Cap Equity (VSTCX - Free Report) as a possibility. VSTCX carries a Zacks Mutual Fund Rank of 1 (Strong Buy), which is based on nine forecasting factors like size, cost, and past performance.
Objective
VSTCX 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
VSTCX finds itself in the Vanguard Group family, based out of Malvern, PA. Since Vanguard Strategic Small Cap Equity made its debut in April of 2006, VSTCX has garnered more than $1.22 billion in assets. The fund's current manager, James P. Stetler, has been in charge of the fund since April of 2006.
Performance
Obviously, what investors are looking for in these funds is strong performance relative to their peers. VSTCX has a 5-year annualized total return of 3.14% and is in the bottom third among its category peers. Investors who prefer analyzing shorter time frames should look at its 3-year annualized total return of 0.52%, which places it in the bottom 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. The standard deviation of VSTCX over the past three years is 17.43% compared to the category average of 17.27%. The fund's standard deviation over the past 5 years is 16.44% compared to the category average of 16.49%. This makes the fund less volatile than its peers over the past half-decade.
Risk Factors
One cannot ignore the volatility of this segment, however, as it is always important for investors to remember the downside to any potential investment. In VSTCX's case, the fund lost 54.57% in the most recent bear market and underperformed comparable funds by 1%. This means that the fund could possibly be a worse choice than its peers during a down market environment.
Investors should note that the fund has a 5-year beta of 1.16, so it is likely going to be more volatile than the market at large. 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 -6.34. This means 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 primarily on equities that are traded in the United States.
As of the last filing date, the mutual fund has 97.05% of its assets in stocks, with an average market capitalization of $3.40 billion. The fund has the heaviest exposure to the following market sectors:
- Finance
- Technology
Turnover is 67%, which means this fund makes fewer trades than the average comparable fund.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, VSTCX is a no load fund. It has an expense ratio of 0.26% compared to the category average of 1.10%. So, VSTCX is actually cheaper than its peers from a cost perspective.
Investors need to be aware that with this product, the minimum initial investment is $3,000; each subsequent investment needs to be at least $1.
Bottom Line
Overall, Vanguard Strategic Small Cap Equity ( VSTCX ) has a high Zacks Mutual Fund rank, and in conjunction with its comparatively weak performance, average downside risk, and lower fees, Vanguard Strategic Small Cap Equity ( VSTCX ) looks like a great potential choice for investors right now.
This could just be the start of your research on VSTCXin 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. Zacks provides a full suite of tools to help you analyze your portfolio - both funds and stocks - in the most efficient way possible.