There are plenty of choices in the Mid Cap Blend category, but where should you start your research? Well, one fund that might be worth investigating is Vanguard Strategic Equity Fund (
VSEQX Quick Quote VSEQX - Free Report) . VSEQX possesses a Zacks Mutual Fund Rank of 1 (Strong Buy), which is based on nine forecasting factors like size, cost, and past performance. Objective
The world of Mid Cap Blend mutual funds is an area filled with options, such as VSEQX. Mid Cap Blend funds expose investors to value picks, income opportunities, and exciting growth potential, but also gives some stability; these funds usually seek a stock portfolio of various size and style, which allows for diversification when the focus is on companies with market capitalization in the range of $2 billion to $10 billion.
History of Fund/Manager
VSEQX finds itself in the Vanguard Group family, based out of Malvern, PA. Since Vanguard Strategic Equity Fund made its debut in August of 1995, VSEQX has garnered more than $7.33 billion in assets. James P. Stetler is the fund's current manager and has held that role since January of 2012.
Of course, investors look for strong performance in funds. This fund has delivered a 5-year annualized total return of 8.3%, and is in the top 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 9.61%, 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. VSEQX's standard deviation over the past three years is 15.72% compared to the category average of 13.98%. The standard deviation of the fund over the past 5 years is 14.63% compared to the category average of 13.81%. This makes the fund more volatile than its peers over the past half-decade.
One cannot ignore the volatility of this segment, however, as it is always important for investors to remember the downside to any potential investment. In the most recent bear market, VSEQX lost 56.19% and underperformed comparable funds by 6%. These results could imply that the fund is a worse choice than its peers during a sliding market environment.
Even still, the fund has a 5-year beta of 1.11, so investors should note that it is hypothetically more volatile than 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. VSEQX has generated a negative alpha over the past five years of -3.5, demonstrating that managers in this portfolio find it difficult to pick securities that generate better-than-benchmark returns.
Exploring 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.
Right now, 96.65% of this mutual fund's holdings are stocks, and these companies have an average market capitalization of $8.86 billion. The fund has the heaviest exposure to the following market sectors:
Turnover is about 116%, so those in charge of the fund make more trades per year than the comparable average.
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, VSEQX is a no load fund. It has an expense ratio of 0.17% compared to the category average of 0.98%. So, VSEQX is actually cheaper than its peers from a cost perspective.
This fund requires a minimum initial investment of $3,000, and each subsequent investment should be at least $1.
Overall, Vanguard Strategic Equity Fund ( VSEQX ) 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.
For additional information on this product, or to compare it to other mutual funds in the Mid Cap Blend, make sure to go to
www.zacks.com/funds/mutual-funds for additional information. Zacks provides a full suite of tools to help you analyze your portfolio - both funds and stocks - in the most efficient way possible.