7.3 in Small Blend
U.S. News evaluated 215 Small Blend Funds. Our list highlights the top-rated funds for long-term investors based on the ratings of leading fund industry researchers.
| Scorecard | |
|---|---|
| Morningstar | 3 / 5 Stars |
| Lipper | 5 5 2 5 4 |
| Zacks Investment Research | 3 (Hold) |
| Standard & Poor's | 4 / 5 Stars |
| TheStreet.com | B+ (Buy) |
Fund Overview
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 April 04, 2012, the fund has assets totaling $26.33 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 3.57 percent over the past five years and 7.48 percent over the past decade.
| Trailing Returns | Updated 03.31.2012 |
|---|---|
| Year to date | 12.9% |
| 1 Year | 0.9% |
| 3 Years (Annualized) | 30.2% |
| 5 Years (Annualized) | 3.6% |
| 10 Years (Annualized) | 7.5% |
Investment Strategy
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."
Fund Opinion
The fund appears on the 2011 Money 70 list of recommended mutual and exchange-traded funds.
Money 70 2011-01-21
Management
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.
Morningstar gives this fund a stewardship rating of B on a scale of A to F, saying, “This isn’t Jack Bogle’s Vanguard, but it’s still a fine steward of shareholders’ wealth. The family’s mutual ownership structure helps it offer low fees and keep investor interests paramount. A blemish-free regulatory record and loyal fund owners and employees also help make this a trustworthy fund.”
Morningstar
In the annual Lipper/Barron’s Fund Families Survey for 2009, Vanguard ranks 40th out of 61 fund families surveyed.
Lipper
Performance
The fund has returned 0.85 percent over the past year, 30.17 percent over the past three years, 3.57 percent over the past five years, and 7.48 percent over the past decade.
Hypothetical Growth of $10,000
Updated 03.31.2012
Holdings
The fund tracks the investment performance of the MCSI U.S. Small Cap 1750 Index. It uses the replication method, holding the same stocks as the target index in approximately the same proportions, according to the prospectus.
Asset Allocation
| % Long | % Net | |
|---|---|---|
| Cash | 0.21 | 0.21 |
| Stocks | 98.35 | 98.35 |
| Bonds | 0.03 | 0.03 |
| Other | 0.0 | 0.0 |
| Foreign Bonds | 0.0 | 0.0 |
| Foreign Stocks | 1.4 | 1.4 |
| Convertible | 0.0 | 0.0 |
| Preferred | 0.01 | 0.01 |
Updated 12.31.2011
Top Holdings
Performance as of 03.31.2012
Portfolio as of 12.31.2011
| Ticker | YTD Return % | % Net Assets | |
|---|---|---|---|
| Panera Bread Company, Inc. A | PNRA | 13.16 | 0.27 |
| Corn Products International, Inc. | CPO | 11.03 | 0.27 |
| Oil States International, Inc. | OIS | 3.71 | 0.26 |
| ITC Holdings Corp | ITC | 2.56 | 0.26 |
| Biomarin Pharmaceutical, Inc. | BMRN | -1.75 | 0.26 |
Fees
Vanguard Small Cap Index Fund has an expense ratio of 0.24 percent.
Risk
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.
