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Is Vanguard FTSE All-World ex-US Small Capital Index Investor (VFSVX) a Strong Mutual Fund Pick Right Now?

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There are plenty of choices in the Global - Equity category, but where should you start your research? Well, one fund that might be worth investigating is Vanguard FTSE All-World ex-US Small Capital Index Investor (VFSVX - Free Report) . VFSVX holds a Zacks Mutual Fund Rank of 2 (Buy), which is based on nine forecasting factors like size, cost, and past performance.

Objective

VFSVX is classified in the Global - Equity segment by Zacks, an area full of possibilities. Even though Global - Equity mutual funds invest in bigger markets like the U.S., Europe, and Japan, these kinds of funds aren't limited by geography. Rather, they offer an investment strategy that utilizes the global economy to provide stable returns.

History of Fund/Manager

Vanguard Group is based in Malvern, PA, and is the manager of VFSVX. Vanguard FTSE All-World ex-US Small Capital Index Investor made its debut in March of 2009, and since then, VFSVX has accumulated about $939.32 million in assets, per the most up-to-date date available. The fund's current manager, Jeffrey D. Miller, has been in charge of the fund since August of 2015.

Performance

Of course, investors look for strong performance in funds. This fund in particular has delivered a 5-year annualized total return of 7.16%, and it sits in the bottom 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 7.33%, which places it in the top 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 9.98%, the standard deviation of VFSVX over the past three years is 10.77%. Looking at the past 5 years, the fund's standard deviation is 11.43% compared to the category average of 9.75%. This makes the fund more volatile than its peers over the past half-decade.

Risk Factors

One cannot ignore the volatility of this segment, however, as it is always important for investors to remember the downside to any potential investment.

Investors should note that the fund has a 5-year beta of 0.86, so it is likely going to be less 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. VFSVX's 5-year performance has produced a negative alpha of -3.3, which means managers in this portfolio find it difficult to pick securities that generate better-than-benchmark returns.

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, VFSVX is a no load fund. It has an expense ratio of 0.25% compared to the category average of 1.19%. Looking at the fund from a cost perspective, VFSVX is actually cheaper than its peers.

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.

Bottom Line

Overall, Vanguard FTSE All-World ex-US Small Capital Index Investor has a high Zacks Mutual Fund rank, and in conjunction with its comparatively weak performance, average downside risk, and lower fees, Vanguard FTSE All-World ex-US Small Capital Index Investor looks like a great potential choice for investors right now.

For additional information on the Global - Equity area of the mutual fund world, make sure to check out www.zacks.com/funds/mutual-funds. There, you can see more about the ranking process, and dive even deeper into VFSVX too for additional information. And don't forget, Zacks has all of your needs covered on the equity side too! Make sure to check out Zacks.com for more information on our screening capabilities, Rank, and all our articles as well.




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