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Is Vanguard FTSE All-World ex-US Small Capital Index Investor (VFSVX) a Strong Mutual Fund Pick Right Now?

Having trouble finding a Global - Equity fund? Well, Vanguard FTSE All-World ex-US Small Capital Index Investor (VFSVX) would not be a good potential starting point right now. VFSVX holds a Zacks Mutual Fund Rank of 5 (Strong Sell), which is based on nine forecasting factors like size, cost, and past performance.

Objective

VFSVX is classified in the Global - Equity segment by Zacks, an area full of possibilities. Even though Global - Equity mutual funds invest in bigger markets like the U.S., Europe, and Japan, these kinds of funds aren't limited by geography. Rather, they offer an investment strategy that utilizes the global economy to provide stable returns.

History of Fund/Manager

Vanguard Group is based in Malvern, PA, and is the manager of VFSVX. The Vanguard FTSE All-World ex-US Small Capital Index Investor made its debut in March of 2009 and VFSVX has managed to accumulate roughly $804.29 million in assets, as of the most recently available information. The fund is currently managed by Jeffrey D. Miller who has been in charge of the fund since August of 2015.

Performance

Of course, investors look for strong performance in funds. This fund in particular has delivered a 5-year annualized total return of 2.56%, and it sits in the bottom third among its category peers. Investors who prefer analyzing shorter time frames should look at its 3-year annualized total return of 5.15%, which places it in the bottom 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. VFSVX's standard deviation over the past three years is 11.61% compared to the category average of 9.62%. Looking at the past 5 years, the fund's standard deviation is 11.55% compared to the category average of 9.83%. This makes the fund more volatile than its peers over the past half-decade.

Risk Factors

It's always important to be aware of the downsides to any future investment, so one should not discount the risks that come with this segment.

Nevertheless, with a 5-year beta of 0.87, the fund is likely to be less 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. VFSVX has generated a negative alpha over the past five years of -6.35, demonstrating that managers in this portfolio find it difficult to pick securities that generate better-than-benchmark returns.

Expenses

For investors, taking a closer look at cost-related metrics is key, since costs are increasingly important for mutual fund investing. Competition is heating up in this space, and a lower cost product will likely outperform its otherwise identical counterpart, all things being equal. In terms of fees, VFSVX is a no load fund. It has an expense ratio of 0.25% compared to the category average of 1.19%. VFSVX 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 $3,000; each subsequent investment needs to be at least $1.

Bottom Line

Overall, Vanguard FTSE All-World ex-US Small Capital Index Investor ( VFSVX ) has a low Zacks Mutual Fund rank, and in conjunction with its comparatively weak performance, average downside risk, and lower fees, Vanguard FTSE All-World ex-US Small Capital Index Investor ( VFSVX ) looks like a somewhat weak choice for investors right now.

For additional information on this product, or to compare it to other mutual funds in the Global - Equity, make sure to go to www.zacks.com/funds/mutual-funds for additional information. If you are more of a stock investor, make sure to also check out our Zacks Rank, and our full suite of tools we have available for novice and professional investors alike.

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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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