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Is Vanguard Explorer Fund Investor (VEXPX) a Strong Mutual Fund Pick Right Now?

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Having trouble finding a Small Cap Growth fund? Vanguard Explorer Fund Investor (VEXPX - Free Report) is a potential starting point. VEXPX bears a Zacks Mutual Fund Rank of 1 (Strong Buy), which is based on nine forecasting factors like size, cost, and past performance.

Objective

VEXPX is one of many different Small Cap Growth funds to choose from. Small Cap Growth mutual funds build portfolios around stocks with markets caps under $2 billion and large growth opportunities. Additionally, these portfolios typically highlight smaller companies in promising markets and industries.

History of Fund/Manager

Vanguard Group is based in Malvern, PA, and is the manager of VEXPX. Vanguard Explorer Fund Investor debuted in December of 1967. Since then, VEXPX has accumulated assets of about $4.03 billion, according to the most recently available information. The fund is currently managed by a team of investment professionals.

Performance

Obviously, what investors are looking for in these funds is strong performance relative to their peers. VEXPX has a 5-year annualized total return of 21.03% and is in the middle third among its category peers. Investors who prefer analyzing shorter time frames should look at its 3-year annualized total return of 17.7%, which places it in the middle 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 VEXPX over the past three years is 24.87% compared to the category average of 20.19%. The fund's standard deviation over the past 5 years is 20.01% compared to the category average of 16.94%. This makes the fund more volatile than its peers over the past half-decade.

Risk Factors

Investors should not forget about beta, an important way to measure a mutual fund's risk compared to the market as a whole. VEXPX has a 5-year beta of 1.23, which means it 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. VEXPX has generated a positive alpha over the past five years of 1.57, demonstrating that managers in this portfolio are skilled in picking securities that generate better-than-benchmark returns.

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, VEXPX is a no load fund. It has an expense ratio of 0.41% compared to the category average of 1.22%. VEXPX 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

Overall, Vanguard Explorer Fund Investor ( VEXPX ) has a high Zacks Mutual Fund rank, and in conjunction with its comparatively similar performance, average downside risk, and lower fees, Vanguard Explorer Fund Investor ( VEXPX ) looks like a good potential choice for investors right now.

For additional information on this product, or to compare it to other mutual funds in the Small Cap Growth, make sure to go to www.zacks.com/funds/mutual-funds for additional information. If you want to check out our stock reports as well, make sure to go to Zacks.com to see all of the great tools we have to offer, including our time-tested Zacks Rank.


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