There are plenty of choices in the Small Cap Growth category, but where should you start your research? Well, one fund that you should consider investigating is Vanguard Explorer Fund Investor (
VEXPX Quick Quote VEXPX - Free Report) . VEXPX carries a Zacks Mutual Fund Rank of 3 (Hold), which is based on nine forecasting factors like size, cost, and past performance. Objective
The world of Small Cap Growth funds is an area filled with options, such as VEXPX. These funds tend to create their portfolios around stocks that sport large growth opportunities and market capitalization of less than $2 billion. The companies in these portfolios are usually on the smaller side, and are in up-and-coming industries and markets.
History of Fund/Manager
VEXPX finds itself in the Vanguard Group family, based out of Malvern, PA. Vanguard Explorer Fund Investor debuted in December of 1967. Since then, VEXPX has accumulated assets of about $3.53 billion, according to the most recently available information. A team of investment professionals is the fund's current manager.
Obviously, what investors are looking for in these funds is strong performance relative to their peers. This fund in particular has delivered a 5-year annualized total return of 13.74%, 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 8.27%, which places it in the bottom 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. Compared to the category average of 11.29%, the standard deviation of VEXPX over the past three years is 13.3%. The standard deviation of the fund over the past 5 years is 13% compared to the category average of 13.82%. This makes the fund less volatile than its peers over the past half-decade.
Investors cannot discount the risks to this segment though, as it is always important to remember the downside for any potential investment. VEXPX lost 52.38% in the most recent bear market and outperformed its peer group by 0.69%. This means that the fund could possibly be a better choice than its peers during a down market environment.
Nevertheless, investors should also note that the fund has a 5-year beta of 1.15, which means it is hypothetically 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. Over the past 5 years, the fund has a negative alpha of -3.61. This means that managers in this portfolio find it difficult to pick securities that generate better-than-benchmark returns.
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 0.43% compared to the category average of 1.34%. VEXPX 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 $3,000; each subsequent investment needs to be at least $1.
Overall, Vanguard Explorer Fund Investor has a neutral Zacks Mutual Fund rank, and in conjunction with its comparatively similar performance, average downside risk, and lower fees, this fund looks like a somewhat average choice for investors right now.
This could just be the start of your research on VEXPXin the Small Cap Growth 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.