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Is Vanguard Extended Market Index Admiral (VEXAX) a Strong Mutual Fund Pick Right Now?

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There are plenty of choices in the Small Cap Blend category, but where should you start your research? Well, one fund that might be worth investigating is Vanguard Extended Market Index Admiral (VEXAX). VEXAX has a Zacks Mutual Fund Rank of 1 (Strong Buy), which is based on nine forecasting factors like size, cost, and past performance.

Objective

Zacks categorizes VEXAX as Small Cap Blend, which is an area packed with options. Usually targeting stocks with market caps of less than $2 billion, a Small Cap Blend mutual fund lets investors diversify their funds among other kinds of small-cap equities. This can help reduce risk found in companies that have a lower stock market valuation.

History of Fund/Manager

VEXAX is a part of the Vanguard Group family of funds, a company based out of Malvern, PA. Vanguard Extended Market Index Admiral debuted in November of 2000. Since then, VEXAX has accumulated assets of about $19.31 billion, according to the most recently available information. Donald M. Butler is the fund's current manager and has held that role since November of 2000.

Performance

Of course, investors look for strong performance in funds. This fund carries a 5-year annualized total return of 8.32%, and it sits in the middle third among its category peers. If you're interested in shorter time frames, do not dismiss looking at the fund's 3-year annualized total return of 10.17%, which places it in the middle 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. VEXAX's standard deviation over the past three years is 12.84% compared to the category average of 9.7%. The standard deviation of the fund over the past 5 years is 12.56% compared to the category average of 9.77%. 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. VEXAX lost 52.73% in the most recent bear market and underperformed its peer group by 0.28%. This makes the fund a possibly worse choice than its peers during a sliding market environment.

Nevertheless, investors should also note that the fund has a 5-year beta of 1.08, which means it is hypothetically more volatile than the market at large. 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. VEXAX's 5-year performance has produced a negative alpha of -3.06, which means managers in this portfolio find it difficult to pick securities that generate better-than-benchmark returns.

Expenses

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, VEXAX is a no load fund. It has an expense ratio of 0.08% compared to the category average of 1.08%. Looking at the fund from a cost perspective, VEXAX 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.

Bottom Line

Overall, Vanguard Extended Market Index Admiral ( VEXAX ) has a high Zacks Mutual Fund rank, and in conjunction with its comparatively similar performance, average downside risk, and lower fees, this fund looks like a good potential choice for investors right now.

Don't stop here for your research on Small Cap Blend funds. We also have plenty more on our site in order to help you find the best possible fund for your portfolio. Make sure to check out www.zacks.com/funds/mutual-funds for more information about the world of funds, and feel free to compare VEXAX to its peers as well for additional information. If you want to check out our stock reports as well, make sure to go to Zacks.com to see all of the great tools we have to offer, including our time-tested Zacks Rank.

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The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.


The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

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