On the lookout for a Small Cap Growth fund? Starting with Vanguard Explorer Fund Investor (VEXPX) is one possibility. VEXPX possesses a Zacks Mutual Fund Rank of 1 (Strong Buy), which is based on nine forecasting factors like size, cost, and past performance.
VEXPX is part of the Small Cap Growth category, and this segment boasts an array of many other possible options. Small Cap Growth mutual funds usually focus their portfolios on stocks with large growth opportunities and a market cap of under $2 billion. These portfolios tend to feature small companies in up-and-coming industries and markets.
History of Fund/Manager
VEXPX is a part of the Vanguard Group family of funds, a company based out of Malvern, PA. The Vanguard Explorer Fund Investor made its debut in December of 1967 and VEXPX has managed to accumulate roughly $3.38 billion in assets, as of the most recently available information. A team of investment professionals is the fund's current manager.
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 8.89%, and it sits in the middle third among its category peers. Investors who prefer analyzing shorter time frames should look at its 3-year annualized total return of 18.18%, 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, VEXPX's standard deviation comes in at 15.05%, compared to the category average of 12.59%. The standard deviation of the fund over the past 5 years is 15.26% compared to the category average of 12.34%. 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. VEXPX lost 52.38% in the most recent bear market and outperformed its peer group by 0.59%. This means that the fund could possibly be a better choice than its peers during a down market environment.
Investors should note that the fund has a 5-year beta of 1.19, so it is likely going to be more volatile than the market at large. Because alpha represents a portfolio's performance on a risk-adjusted basis relative to a benchmark, which is the S&P 500 in this case, one should pay attention to this metric as well. The fund has produced a negative alpha over the past 5 years of -3.26, which shows that managers in this portfolio find it difficult to pick securities that generate better-than-benchmark returns.
Investigating 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.
Currently, this mutual fund is holding 98.42% stock in stocks, which have an average market capitalization of $6.24 billion. The fund has the heaviest exposure to the following market sectors:
- Industrial Cyclical
With turnover at about 50%, this fund makes more trades per year than the comparable average.
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, VEXPX is a no load fund. It has an expense ratio of 0.44% compared to the category average of 1.25%. Looking at the fund from a cost perspective, VEXPX 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.
Overall, Vanguard Explorer Fund Investor ( VEXPX ) has a high Zacks Mutual Fund rank, similar performance, average downside risk, and lower fees compared to its peers.
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