On the lookout for a Small Cap Blend fund? Starting with Vanguard Tax-Managed Small Cap Investor (
VTMSX Quick Quote VTMSX - Free Report) is one possibility. VTMSX bears a Zacks Mutual Fund Rank of 1 (Strong Buy), which is based on nine 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
VTMSX is a part of the Vanguard Group family of funds, a company based out of Malvern, PA. The Vanguard Tax-Managed Small Cap Investor made its debut in April of 1999 and VTMSX has managed to accumulate roughly $6.32 billion in assets, as of the most recently available information. William A. Coleman is the fund's current manager and has held that role since April of 2016.
Investors naturally seek funds with strong performance. This fund has delivered a 5-year annualized total return of 9.43%, and is in the top third among its category peers. Investors who prefer analyzing shorter time frames should look at its 3-year annualized total return of 8.51%, 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. Over the past three years, VTMSX's standard deviation comes in at 16.4%, compared to the category average of 13.41%. Looking at the past 5 years, the fund's standard deviation is 15.89% compared to the category average of 12.89%. This makes the fund more volatile than its peers over the past half-decade.
Investors should always remember the downsides to a potential investment, and this segment carries some risks one should be aware of. In VTMSX's case, the fund lost 50.89% in the most recent bear market and outperformed its peer group by 2%. This might suggest that the fund is a better choice than its peers during a bear market.
Nevertheless, investors should also note that the fund has a 5-year beta of 1.12, which means 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. With a negative alpha of -2.05, managers in this portfolio find it difficult to pick securities that generate better-than-benchmark returns.
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 mostly on equities that are traded in the United States.
The mutual fund currently has 97.61% of its holdings in stocks, with an average market capitalization of $1.85 billion. The fund has the heaviest exposure to the following market sectors:
Finance Industrial Cyclical Technology
With turnover at about 106%, this fund is making fewer trades than comparable funds.
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 1.11%. 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.
Overall, Vanguard Tax-Managed Small Cap Investor ( VTMSX ) 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.
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