4 / 5 Stars
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Standard & Poor's
5 / 5 Stars
#14 in Small Blend
U.S. News evaluated 227 Small Blend Funds. Our list highlights the top-rated funds for long-term investors based on the ratings of leading fund industry researchers.
The fund has returned 31.38 percent over the past year, 15.21 percent over the past three years, 29.01 percent over the past five years, and 9.95 percent over the past decade.
|Trailing Returns||Updated 02.28.2014|
|Year to date||2.9%|
|3 Years (Annualized)||15.2%|
|5 Years (Annualized)||29.0%|
|10 Years (Annualized)||9.9%|
The Vanguard Small-Cap Index Fund boasts low expenses, low turnover, highly experienced management, and broad exposure to a diverse number of stocks and sectors. The fund generally lives up to a reputation as a solid index tracker.
As of March 05, 2014, the fund has assets totaling $46.37 billion. The fund’s objective is to track the performance of the Morgan Stanley Capital International (MSCI) U.S. Small Cap 1750 Index. The fund’s portfolio consists of small-capitalization growth and value stocks from a diversified group of U.S. companies.
In 2003, the fund switched its benchmark from the Russell 2000 Index to the MSCI U.S. Small Cap 1750 Index, a move that has helped the fund keep a lid on turnover in its portfolio. The fund's largest holdings are in financials (more than 20 percent of assets), followed by industrial materials and healthcare shares. In addition, the fund's "rock-bottom expense ration makes it a solid small-cap option for long-term investors," Morningstar notes.
Since the fund’s switch to the MSCI index, it has followed the benchmark relatively closely. The fund changed managers in 2005 from index guru George Sauter to Michael Buek. Morningstar says, “The fund boasts one of the most experienced managements in the small-cap space, and that ensures a consistently executed strategy that has proven itself in good times and bad.” The fund has returned 29.01 percent over the past five years and 9.95 percent over the past decade.
The fund uses passive management, or indexing, by attempting to duplicate its target index, the MCSI U.S. Small Cap 1750 Index. The fund invests all, or mostly all, of its assets in stocks that make up the index.
Role in Portfolio
Morningstar calls this fund a "supporting player."
The fund is managed by Michael Buek, who took over in 2005. He has been working for Vanguard since 1987 and has managed investment portfolios, including the Small-Cap Index Fund, since 1991. Buek also manages the Vanguard 500 Index Fund. The fund was managed by George Sauter from 1989 until 2005. He gradually reduced his managerial involvement in the fund when he became Vanguard’s chief investment officer in March 2003 and left the fund in 2005, according to Morningstar.
Vanguard Small Cap Index Fund has an expense ratio of 0.24 percent.
Since the fund follows a target benchmark, it is susceptible to stock market risk, with the chance that the stock prices of its underlying benchmark index may decline. Historically, small-cap stocks have been more volatile than large-cap stocks.