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Is Vanguard Small-Cap Index Admiral (VSMAX) a Strong Mutual Fund Pick Right Now?

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Have you been searching for an Index fund? You might want to begin with Vanguard Small-Cap Index Admiral (VSMAX - Free Report) . While this fund is not tracked by the Zacks Mutual Fund Rank, we were able to examine other factors like performance, volatility, and cost.

History of Fund/Manager

Vanguard Group is responsible for VSMAX, and the company is based out of Malvern, PA. Vanguard Small-Cap Index Admiral made its debut in November of 2000, and since then, VSMAX has accumulated about $54.69 billion in assets, per the most up-to-date date available. William Coleman is the fund's current manager and has held that role since April of 2016.

Performance

Investors naturally seek funds with strong performance. This fund in particular has delivered a 5-year annualized total return of 14.48%, and is in the top third among its category peers. If you're interested in shorter time frames, do not dismiss looking at the fund's 3-year annualized total return of 13.5%, 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. Over the past three years, VSMAX's standard deviation comes in at 24.74%, compared to the category average of 15.43%. The standard deviation of the fund over the past 5 years is 19.89% compared to the category average of 12.78%. This makes the fund more volatile than its peers over the past half-decade.

Risk Factors

Investors should note that the fund has a 5-year beta of 1.21, so it is likely going to be more volatile than the market at large. Because alpha represents a portfolio's performance on a risk-adjusted basis relative to a benchmark, which is the S&P 500 in this case, one should pay attention to this metric as well. VSMAX's 5-year performance has produced a negative alpha of -4.95, which means managers in this portfolio find it difficult to pick securities that generate better-than-benchmark returns.

Holdings

Investigating 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 principally on equities that are traded in the United States.

Right now, 82.83% of this mutual fund's holdings are stocks, and these companies have an average market capitalization of $6.92 billion. The fund has the heaviest exposure to the following market sectors:

  1. Finance
  2. Technology
  3. Industrial Cyclical
This fund's turnover is about 22%, so the fund managers are making fewer trades than its comparable peers.

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, VSMAX is a no load fund. It has an expense ratio of 0.05% compared to the category average of 0.79%. VSMAX 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

Don't stop here for your research on Index funds. We also have plenty more on our site in order to help you find the best possible fund for your portfolio. Make sure to check out www.zacks.com/funds/mutual-funds for more information about the world of funds, and feel free to compare VSMAX to its peers as well for additional information. For analysis of the rest of your portfolio, make sure to visit Zacks.com for our full suite of tools which will help you investigate all of your stocks and funds in one place.


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