Back to top

Image: Bigstock

Is Vanguard Extended Market Index Admiral (VEXAX) a Strong Mutual Fund Pick Right Now?

Read MoreHide Full Article

There are plenty of choices in the Mutual Fund Equity Report category, but where should you start your research? Well, one fund that might be worth investigating is Vanguard Extended Market Index Admiral (VEXAX - Free Report) . VEXAX has no Zacks Mutual Fund Rank, but we have been able to look into other metrics like performance, volatility, and cost.

History of Fund/Manager

VEXAX finds itself in the Vanguard Group family, based out of Malvern, PA. Vanguard Extended Market Index Admiral debuted in November of 2000. Since then, VEXAX has accumulated assets of about $22.41 billion, according to the most recently available information. The fund is currently managed by Donald Butler who has been in charge of the fund since November of 2000.

Performance

Obviously, what investors are looking for in these funds is strong performance relative to their peers. VEXAX has a 5-year annualized total return of 9.01% and is in the bottom 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 10.49%, 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, VEXAX's standard deviation comes in at 24.59%, compared to the category average of 16.78%. Looking at the past 5 years, the fund's standard deviation is 21.68% compared to the category average of 14.76%. This makes the fund more volatile than its peers over the past half-decade.

Risk Factors

With a 5-year beta of 1.21, the fund is likely to be more volatile than the market average. 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. VEXAX has generated a negative alpha over the past five years of -5.47, demonstrating 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.

This fund is currently holding about 98.24% stock in stocks, with an average market capitalization of $16.95 billion. The fund has the heaviest exposure to the following market sectors:

  1. Technology
  2. Finance
  3. Other
With turnover at about 19%, this fund is making fewer trades than comparable funds.

Expenses

As competition heats up in the mutual fund market, costs become increasingly important. Compared to its otherwise identical counterpart, a low-cost product will be an outperformer, all other things being equal. Thus, taking a closer look at cost-related metrics is vital for investors. In terms of fees, VEXAX is a no load fund. It has an expense ratio of 0.06% compared to the category average of 0.98%. Looking at the fund from a cost perspective, VEXAX is actually cheaper than its peers.

This fund requires a minimum initial investment of $3,000, and each subsequent investment should be at least $1.

Bottom Line

Your research on the Mutual Fund Equity Report segment doesn't have to stop here. You can check out all the great mutual fund tools we have to offer by going to www.zacks.com/funds/mutual-funds to see the additional features we offer as well for additional information. Want to learn even more? We have a full suite of tools on stocks that you can use to find the best choices for your portfolio too, no matter what kind of investor you are.


In-Depth Zacks Research for the Tickers Above


Normally $25 each - click below to receive one report FREE:


Vanguard Extended Market Index Adm (VEXAX) - free report >>

Published in