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Is Vanguard Tax-Managed Small Cap Investor (VTMSX) a Strong Mutual Fund Pick Right Now?
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Any investors hoping to find a Small Cap Blend fund might consider looking past Vanguard Tax-Managed Small Cap Investor (VTMSX - Free Report) . VTMSX carries a Zacks Mutual Fund Rank of 4 (Sell), which is based on various forecasting factors like size, cost, and past performance.
Objective
VTMSX is one of many Small Cap Blend funds to choose from. Small Cap Blend mutual funds allow investors a way to diversify their funds among various types of small-cap stocks. These funds seek companies with market capitalization of less than $2 billion, and aid in reducing volatility inherent in lower market cap stocks.
History of Fund/Manager
Vanguard Group is based in Malvern, PA, and is the manager of VTMSX. Vanguard Tax-Managed Small Cap Investor debuted in April of 1999. Since then, VTMSX has accumulated assets of about $9.56 billion, according to the most recently available information. The fund is currently managed by Kenny Narzikul who has been in charge of the fund since August of 2023.
Performance
Of course, investors look for strong performance in funds. This fund has delivered a 5-year annualized total return of 5.96%, and it sits 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 16.39%, which places it in the middle 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 14.51%, the standard deviation of VTMSX over the past three years is 19.1%. The fund's standard deviation over the past 5 years is 19.67% compared to the category average of 15.77%. 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 1.02, so it is likely going to be as volatile as the market at large. Alpha is an additional metric to take into consideration, since it represents a portfolio's performance on a risk-adjusted basis relative to a benchmark, which in this case, is the S&P 500. The fund has produced a negative alpha over the past 5 years of -6.88, 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 primarily on equities that are traded in the United States.
As of the last filing date, the mutual fund has 79% of its assets in stocks, and these companies have an average market capitalization of $3.79 billion. The fund has the heaviest exposure to the following market sectors:
Finance
Technology
Industrial Cyclical
This fund's turnover is about 18%, so the fund managers are making fewer trades than the average comparable fund.
Expenses
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, VTMSX is a no load fund. It has an expense ratio of 0.09% compared to the category average of 0.96%. VTMSX is actually cheaper than its peers when you consider factors like cost.
Investors should also note that the minimum initial investment for the product is $10,000 and that each subsequent investment needs to be at $1.
Fees charged by investment advisors have not been taken into consideration. Returns would be less if those were included.
Bottom Line
Overall, Vanguard Tax-Managed Small Cap Investor ( VTMSX ) has a low Zacks Mutual Fund rank, and in conjunction with its comparatively similar performance, average downside risk, and lower fees, this fund looks like a somewhat weak choice for investors right now.
For additional information on this product, or to compare it to other mutual funds in the Small Cap Blend, make sure to go to www.zacks.com/funds/mutual-funds 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.
View the Zacks #1 Rank List
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Is Vanguard Tax-Managed Small Cap Investor (VTMSX) a Strong Mutual Fund Pick Right Now?
Any investors hoping to find a Small Cap Blend fund might consider looking past Vanguard Tax-Managed Small Cap Investor (VTMSX - Free Report) . VTMSX carries a Zacks Mutual Fund Rank of 4 (Sell), which is based on various forecasting factors like size, cost, and past performance.
Objective
VTMSX is one of many Small Cap Blend funds to choose from. Small Cap Blend mutual funds allow investors a way to diversify their funds among various types of small-cap stocks. These funds seek companies with market capitalization of less than $2 billion, and aid in reducing volatility inherent in lower market cap stocks.
History of Fund/Manager
Vanguard Group is based in Malvern, PA, and is the manager of VTMSX. Vanguard Tax-Managed Small Cap Investor debuted in April of 1999. Since then, VTMSX has accumulated assets of about $9.56 billion, according to the most recently available information. The fund is currently managed by Kenny Narzikul who has been in charge of the fund since August of 2023.
Performance
Of course, investors look for strong performance in funds. This fund has delivered a 5-year annualized total return of 5.96%, and it sits 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 16.39%, which places it in the middle 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 14.51%, the standard deviation of VTMSX over the past three years is 19.1%. The fund's standard deviation over the past 5 years is 19.67% compared to the category average of 15.77%. 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 1.02, so it is likely going to be as volatile as the market at large. Alpha is an additional metric to take into consideration, since it represents a portfolio's performance on a risk-adjusted basis relative to a benchmark, which in this case, is the S&P 500. The fund has produced a negative alpha over the past 5 years of -6.88, 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 primarily on equities that are traded in the United States.
As of the last filing date, the mutual fund has 79% of its assets in stocks, and these companies have an average market capitalization of $3.79 billion. The fund has the heaviest exposure to the following market sectors:
This fund's turnover is about 18%, so the fund managers are making fewer trades than the average comparable fund.
Expenses
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, VTMSX is a no load fund. It has an expense ratio of 0.09% compared to the category average of 0.96%. VTMSX is actually cheaper than its peers when you consider factors like cost.
Investors should also note that the minimum initial investment for the product is $10,000 and that each subsequent investment needs to be at $1.
Fees charged by investment advisors have not been taken into consideration. Returns would be less if those were included.
Bottom Line
Overall, Vanguard Tax-Managed Small Cap Investor ( VTMSX ) has a low Zacks Mutual Fund rank, and in conjunction with its comparatively similar performance, average downside risk, and lower fees, this fund looks like a somewhat weak choice for investors right now.
For additional information on this product, or to compare it to other mutual funds in the Small Cap Blend, make sure to go to www.zacks.com/funds/mutual-funds 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.