Any investors hoping to find a Small Cap Blend fund could think about starting with Vanguard Tax-Managed Small Cap Investor (VTMSX Quick QuoteVTMSX - Free Report) . VTMSX 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 VTMSX 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 VTMSX. Since Vanguard Tax-Managed Small Cap Investor made its debut in April of 1999, VTMSX has garnered more than $7.56 billion in assets. The fund is currently managed by Walter Nejman who has been in charge of the fund since February of 2023.

Performance

Investors naturally seek funds with strong performance. This fund carries a 5-year annualized total return of 11.49%, and it sits in the middle third among its category peers. But if you are looking for a shorter time frame, it is also worth looking at its 3-year annualized total return of 3.02%, which places it in the bottom 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. Compared to the category average of 17.67%, the standard deviation of VTMSX over the past three years is 23.2%. The fund's standard deviation over the past 5 years is 21.52% compared to the category average of 17.05%. This makes the fund more volatile than its peers over the past half-decade.

Risk Factors

With a 5-year beta of 1.07, the fund 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. The fund has produced a negative alpha over the past 5 years of -3.92, which shows 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 largely on equities that are traded in the United States.

Currently, this mutual fund is holding 92.42% in stocks, with an average market capitalization of $3.26 billion. The fund has the heaviest exposure to the following market sectors:

• Finance
• Industrial Cyclical
• Technology

Turnover is about 14%, so those in charge of the fund make 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, VTMSX is a no load fund. It has an expense ratio of 0.09% compared to the category average of 0.97%. VTMSX is actually cheaper than its peers when you consider factors like cost.

Investors need to be aware that with this product, the minimum initial investment is $10,000; each subsequent investment needs to be at least $1.

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

Bottom Line

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

This could just be the start of your research on VTMSXin 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. If you are more of a stock investor, make sure to also check out our Zacks Rank, and our full suite of tools we have available for novice and professional investors alike.