Is Vanguard Small-Cap Value Index Admiral (VSIAX) A Strong Mutual Fund Pick Right Now?
Zacks Investment Research | Sep 23, 2019 11:24PM ET
Any investors who are searching for Small Cap Value funds should take a look at Vanguard Small-Cap Value Index Admiral (VSIAX). The fund does not have a Zacks Mutual Fund Rank, though we have been able to explore other metrics like performance, volatility, and cost.
Objective
The world of Small Cap Value mutual funds is an area filled with options, such as VSIAX. Small Cap Value funds invest in small companies with stock market valuation less than $2 billion. These funds offer more bang for an owner's buck, providing low P/E ratios, high dividend yields, and better-than-average P/S ratios.
History of Fund/Manager
Vanguard Group is based in Malvern, PA, and is the manager of VSIAX. Vanguard Small-Cap Value Index Admiral debuted in September of 2011. Since then, VSIAX has accumulated assets of about $12.58 billion, according to the most recently available information. The fund's current manager, William A. Coleman, has been in charge of the fund since April of 2016.
Performance
Obviously, what investors are looking for in these funds is strong performance relative to their peers. This fund carries a 5-year annualized total return of 5.54%, and it sits 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 6.06%, 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, VSIAX's standard deviation comes in at 16.03%, compared to the category average of 11.71%. The standard deviation of the fund over the past 5 years is 15.05% compared to the category average of 11.64%. This makes the fund more volatile than its peers over the past half-decade.
Risk Factors
Investors should always remember the downsides to a potential investment, and this segment carries some risks one should be aware of.
Investors should not forget about beta, an important way to measure a mutual fund's risk compared to the market as a whole. VSIAX has a 5-year beta of 1.11, which means it is likely to be more volatile than the market average. 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. VSIAX has generated a negative alpha over the past five years of -4.78, demonstrating 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.
Get The News You Want
This fund is currently holding about 87.96% stock in stocks, with an average market capitalization of $4.32 billion. The fund has the heaviest exposure to the following market sectors:
- Finance
- Industrial Cyclical
Turnover is 38%, which means this fund makes fewer trades than comparable funds.
Expenses
As competition heats up in the mutual fund market, costs become increasingly important. Compared to its otherwise identical counterpart, a low-cost product will be an outperformer, all other things being equal. Thus, taking a closer look at cost-related metrics is vital for investors. In terms of fees, VSIAX is a no load fund. It has an expense ratio of 0.07% compared to the category average of 1.24%. From a cost perspective, VSIAX is actually cheaper than its peers.
Investors should also note that the minimum initial investment for the product is $3,000 and that each subsequent investment needs to be at $1.
Bottom Line
This could just be the start of your research on VSIAXin the Small Cap Value category. Consider going to Zacks Investment Research
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