If you've been stuck searching for Small Cap Blend funds, consider Vanguard Strategic Small Cap Equity (VSTCX Quick QuoteVSTCX - Free Report) as a possibility. VSTCX bears a Zacks Mutual Fund Rank of 1 (Strong Buy), which is based on various forecasting factors like size, cost, and past performance.

Objective

We classify VSTCX in the Small Cap Blend category, an area rife with potential choices. Small Cap Blend mutual funds usually target companies with a market capitalization of less than $2 billion. A small-cap blend mutual fund allows investors to diversify their funds among various types of small-cap stocks, which can help reduce the volatility inherent in lower market cap companies.

History of Fund/Manager

Vanguard Group is based in Malvern, PA, and is the manager of VSTCX. The Vanguard Strategic Small Cap Equity made its debut in April of 2006 and VSTCX has managed to accumulate roughly $1.78 billion in assets, as of the most recently available information. The fund is currently managed by Cesar Orosco who has been in charge of the fund since February of 2021.

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 14.65% and is in the top third among its category peers. Investors who prefer analyzing shorter time frames should look at its 3-year annualized total return of 7.86%, which places it in the top third during this time-frame.

It is important to note that the product's returns may not reflect all its expenses. Any fees not reflected would lower the returns. Total returns do not reflect the fund's [%] sale charge. If sales charges were included, total returns would have been lower.

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. VSTCX's standard deviation over the past three years is 23.23% compared to the category average of 21.48%. Over the past 5 years, the standard deviation of the fund is 24.88% compared to the category average of 23.94%. 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. 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 -3.35. 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 principally on equities that are traded in the United States.

Currently, this mutual fund is holding 87.49% in stocks, which have an average market capitalization of $4.41 billion. The fund has the heaviest exposure to the following market sectors:

• Finance
• Technology
• Industrial Cyclical

This fund's turnover is about 64%, so the fund managers are making more traders than comparable funds in a given year.

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 1.01%. From a cost perspective, VSTCX is actually cheaper than its peers.

Investors should also note that the minimum initial investment for the product is $3,000 and that each subsequent investment needs to be at $1

Fees charged by investment advisors have not been taken into considiration. Returns would be less if those were included.

Bottom Line

Overall, Vanguard Strategic Small Cap Equity ( VSTCX ) has a high Zacks Mutual Fund rank, and in conjunction with its comparatively strong performance, average downside risk, and lower fees, this fund looks like a good 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. 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.