The Vanguard Small Cap Value Index Fund – Admiral Class is a low-cost investment option that aims to generate superior returns compared to growth stocks. It offers exposure to undervalued small U.S. companies and takes advantage of the higher appreciation rates observed in small stocks relative to larger ones. With $25.17 billion in assets invested in 851 different holdings, this fund tracks the CRSP U.S. Small Cap Value Index and replicates its holdings. Its performance is attributed to the asset class rather than manager stock selection.
Over the past year, the fund has returned -7.44%, while over the past three years, it has returned 15.34%, closely aligning with its benchmark. With an expense ratio of 0.07%, the Vanguard Small Cap Value Index Fund – Admiral Class carries high risk potential. It is recommended as a satellite holding for long-term investors with a high risk tolerance. This fund can complement a diversified portfolio and help achieve return stability.
Key Takeaways
- Low-cost exposure to undervalued small U.S. companies
- Academic evidence suggests small stocks appreciate at higher rates than larger stocks
- Morningstar ranks the fund as one of the lowest-cost ways to own small-cap value stocks
- Suitable satellite holding for long-term investors with a high risk tolerance
Overview
The Vanguard Small Cap Value Index Fund – Admiral Class provides low-cost exposure to undervalued small U.S. companies, which have been shown through academic research to generate better returns than growth stocks and appreciate at higher rates than larger stocks. Morningstar ranks this fund as one of the lowest-cost options for owning small-cap value stocks, with $25.17 billion in assets invested in 851 different holdings.
The fund’s portfolio consists primarily of mid-, small-, or micro-cap U.S. stocks, and it tracks the CRSP U.S. Small Cap Value Index. With a net expense ratio of 0.07%, lower than the category average of 1.19%, the fund is suitable for long-term investors with a high risk tolerance who are seeking diversification in their portfolio.
In the following section, we will explore the investment strategy employed by this fund.
Transition: Now let’s delve into the investment strategy employed by the Vanguard Small Cap Value Index Fund – Admiral Class.
Investment Strategy
By employing a meticulously researched investment strategy, the Vanguard Small Cap Value Index Fund – Admiral Class aims to capitalize on the potential outperformance of undervalued small U.S. companies, thus enticing investors with the prospect of reaping superior returns in comparison to growth stocks.
This fund focuses on providing low-cost exposure to this specific asset class, which research has shown to generate better returns than growth stocks. Additionally, academic evidence suggests that small stocks tend to appreciate at higher rates than larger stocks.
As Morningstar ranks this fund as one of the lowest-cost ways to own small-cap value stocks and it holds $25.17 billion in assets invested in 851 different holdings, it is clear that many investors find value in its investment strategy.
With this understanding of the fund’s objectives and approach, let us now explore its performance over time.
Performance
With returns of -7.44% over the past year and 15.34% over the past three years, the fund’s performance has demonstrated its ability to navigate market conditions and generate favorable results for investors.
Despite the recent negative performance, it is important to note that small value stocks can be volatile in nature.
The fund’s long-term track record shows consistent outperformance compared to its benchmark index, indicating effective implementation of its investment strategy.
The low expense ratios further enhance investor returns by minimizing costs.
Looking ahead, investors should consider the fund’s historical performance as a supporting factor when evaluating potential investments in small-cap value stocks.
Moving on to the top holdings section, it is crucial to analyze which companies contribute to the fund’s overall performance and portfolio composition.
Transition: ‘Analyzing the top holdings will provide insights into the specific companies that contribute to this fund’s performance.’
Top Holdings
Analyzing the top holdings of the Vanguard Small Cap Value Index Fund – Admiral Class reveals the companies that significantly contribute to its performance and portfolio composition. As of now, the fund’s top holdings include:
- Snap-on
- Goodyear Tire & Rubber
- Rite Aid
- Alaska Air Group
These companies represent a diverse range of industries such as automotive tools, tire manufacturing, pharmacy retail, and airline services.
It is important to note that these holdings may change over time as market conditions and investment strategies evolve.
The next section will provide further insights into the rankings of this fund within its category.
Rankings
The Vanguard Small Cap Value Index Fund – Admiral Class is currently not ranked by U.S. News. However, it is important to note that rankings are just one factor to consider when evaluating a fund’s performance. To provide a broader perspective, we can compare the fund to other small value funds in terms of returns and expenses. According to Morningstar, some of the top small value funds include WPG Partners Select Small Cap Value Fund, Pinnacle Value Fund, Hennessy Cornerstone Mid Cap 30 Fund, and Palm Valley Capital Fund. Additionally, the Vanguard Small Cap Value Index Fund – Admiral Class has a lower expense ratio compared to the category average, which may be appealing to cost-conscious investors. Moving forward into the next section about ‘expense and risk’, we will explore more details about these factors for the fund.
Expense and Risk
Considering the fund’s low expense ratio of 0.07% and its classification as an aggressive investment with high risk potential, investors may find it ironic that the Vanguard Small Cap Value Index Fund – Admiral Class offers a cost-effective way to gain exposure to undervalued small U.S. companies.
The fund’s expense ratio is significantly lower than the category average of 1.19%, making it an attractive option for those seeking low-cost investments.
Despite its high risk potential, academic evidence suggests that small value stocks have historically generated better returns than growth stocks, which could potentially offset the higher risk level.
This combination of low costs and potential for higher returns makes the fund an appealing choice for long-term investors with a high risk tolerance.
In comparison to other funds in the small value category, the Vanguard Small Cap Value Index Fund – Admiral Class is not currently ranked among the highest returns.
Transition: Moving on to a comparison with other funds…
Comparison to Other Funds
In comparing the Vanguard Small Cap Value Index Fund – Admiral Class to other funds in the small value category, it is important to assess its performance relative to its peers. While the fund has not been ranked as one of the highest performers in this category, there are other top small value funds available such as WPG Partners Select Small Cap Value Fund, Pinnacle Value Fund, Hennessy Cornerstone Mid Cap 30 Fund, and Palm Valley Capital Fund.
Additionally, Hennessy Cornerstone Mid Cap 30 Fund, FPA Queens Road Small Cap Value Fund, and DFA US Targeted Value Portfolio are among the best small value funds. It is crucial for investors to consider these alternatives when evaluating the Vanguard Small Cap Value Index Fund – Admiral Class.
Moving forward into the discussion of related funds…
Related Funds
Vying for the attention of investors seeking exposure to different sectors, the Vanguard Information Technology Index Fund, Vanguard Mega Cap Growth Index Fund, and Vanguard Russell 1000 Growth Index Fund present compelling alternatives to the aforementioned small value fund.
The Vanguard Information Technology Index Fund provides investors with low-cost exposure to large U.S. technology companies, while the Vanguard Mega Cap Growth Index Fund offers access to high-growth stocks across various sectors. On the other hand, the Vanguard Russell 1000 Growth Index Fund tracks an index that includes large-cap growth stocks from a wide range of industries.
These funds can be attractive options for investors looking for diversification and potential returns in different areas of the market.
Transitioning into the subsequent section about ‘recent performance’, it is important to evaluate how these funds have performed in comparison to each other and the small value fund.
Recent Performance
Recent performance data reveals the trailing total return of the Vanguard Small Cap Value Index Fund – Admiral Class over the past month to be -3.45%. The fund’s performance over the past three months has been -9.76%, -9.3% for the past six months, and -7.44% for the past year. These negative returns indicate a decline in value during these time periods.
When compared to other funds in its category, such as the Hennessy Cornerstone Mid Cap 30 Fund and DFA US Targeted Value Portfolio, the fund’s recent performance is not among the highest returns in the small value category.
This downward trend in performance suggests that investors may have experienced losses with this fund over recent time frames. However, it is important to consider that investment performance can fluctuate and should be evaluated over longer-term periods.
Moving forward, it is crucial to examine other aspects of this fund, such as its expense ratios, to gain a comprehensive understanding of its overall suitability for investors’ portfolios.
Expense Ratios
The fund’s expense ratios, including a net expense ratio of 0.07% and a management expense ratio of 0.06%, are notably lower than the category average, highlighting its cost-efficiency and potential for increased returns.
With a net expense ratio significantly lower than the category average of 1.19% and a management expense ratio lower than the category average of 0.78%, investors can benefit from reduced costs while still gaining exposure to small-cap value stocks.
These low expense ratios contribute to the fund’s appeal as an investment option, as they allow investors to keep more of their returns over time.
By maintaining such low expenses, Vanguard Small Cap Value Index Fund – Admiral Class provides an attractive opportunity for investors looking for cost-effective exposure to undervalued small U.S. companies in order to potentially enhance their long-term investment performance and achieve their financial goals.
Frequently Asked Questions
What is the historical performance of the Vanguard Small Cap Value Index Fund – Admiral Class compared to other small value funds?
The historical performance of the Vanguard Small Cap Value Index Fund – Admiral Class compared to other small value funds has been mixed.
While it has returned 15.34% over the past three years, its recent performance has been negative, with trailing total returns of -3.45% for the past month and -9.76% for the past three months.
In terms of expense ratios, the fund’s net expense ratio of 0.07% is lower than the category average of 1.19%.
However, it is important to note that there are other small value funds that have achieved higher returns, such as Hennessy Cornerstone Mid Cap 30 Fund and FPA Queens Road Small Cap Value Fund.
How does the fund select its holdings and what criteria does it use to determine undervalued small U.S. companies?
The Vanguard Small Cap Value Index Fund – Admiral Class selects its holdings by tracking the CRSP U.S. Small Cap Value Index and replicating its holdings.
The fund’s objective is to provide low-cost exposure to undervalued small U.S. companies.
It determines undervalued companies based on academic research that suggests high-quality value stocks generate better returns than growth stocks and that small stocks appreciate at higher rates than larger stocks.
The fund’s portfolio consists primarily of mid-, small-, or micro-cap U.S. stocks, and the performance is attributable to the asset class rather than manager stock selection.
Are there any specific industries or sectors that the fund focuses on within the small-cap value space?
The Vanguard Small Cap Value Index Fund – Admiral Class focuses on investing in undervalued small U.S. companies. While the specific industries or sectors targeted by the fund are not explicitly mentioned, it primarily consists of mid-, small-, or micro-cap U.S. stocks.
These holdings are selected based on their alignment with the Center for Research in Security Prices Small Cap Value Index, which the fund tracks and replicates. Therefore, the fund’s investment strategy aims to provide low-cost exposure to a diversified portfolio of undervalued small-cap stocks without a specific focus on any particular industry or sector.
What is the minimum investment required to invest in the Vanguard Small Cap Value Index Fund – Admiral Class?
The minimum investment required to invest in the Vanguard Small Cap Value Index Fund – Admiral Class is $3,000.
This fund offers low-cost exposure to undervalued small U.S. companies and has a portfolio consisting primarily of mid-, small-, or micro-cap stocks.
With an expense ratio of 0.07%, it is considered one of the lowest-cost ways to own small-cap value stocks.
The fund’s performance is attributable to the asset class and not manager stock selection, making it a suitable satellite holding for long-term investors with a high risk tolerance.
Can investors in the fund expect dividend distributions, and if so, what is the historical dividend yield of the fund?
Investors in the Vanguard Small Cap Value Index Fund – Admiral Class can expect dividend distributions.
The fund has a historical dividend yield, which is the annual dividend payment divided by the fund’s net asset value per share.
However, the specific historical dividend yield of the fund is not provided in the given information.
Dividend yield is an important measure for income-oriented investors as it reflects the income generated by their investment in relation to its price.
Conclusion
The Vanguard Small Cap Value Index Fund – Admiral Class is a low-cost investment option that focuses on undervalued small U.S. companies. Despite its uninspiring returns over the past year, it has performed in line with its benchmark over the past three years.
With an expense ratio of 0.07%, this fund is not for the faint-hearted and carries high risk potential. However, for those with a high risk tolerance and a long-term investment horizon, it can serve as a satellite holding to complement a diversified portfolio.
