Yahoo Movies Is Vanguard Tax-Managed Small Cap Investor (VTMSX) a Strong Mutual Fund Pick Right Now?
If you have been looking for Mutual Fund Equity Report funds, a place to start could be Vanguard Tax-Managed Small Cap Investor (VTMSX). VTMSX bears a Zacks Mutual Fund Rank of 2 (Buy), which is based on nine forecasting factors like size, cost, and past performance.
History of Fund/Manager
Vanguard Group is based in Malvern, PA, and is the manager of VTMSX. Vanguard Tax-Managed Small Cap Investor made its debut in April of 1999, and since then, VTMSX has accumulated about $7.64 billion in assets, per the most up-to-date date available. The fund's current manager, William Coleman, has been in charge of the fund since April of 2016.
Performance
Of course, investors look for strong performance in funds. This fund carries a 5-year annualized total return of 9.84%, and is in the top third among its category peers. Investors who prefer analyzing shorter time frames should look at its 3-year annualized total return of 13.35%, 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. The standard deviation of VTMSX over the past three years is 23.16% compared to the category average of 19.73%. Looking at the past 5 years, the fund's standard deviation is 21.42% compared to the category average of 17.39%. This makes the fund more volatile than its peers over the past half-decade.
Risk Factors
Investors should note that the fund has a 5-year beta of 1.13, which means it is hypothetically 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. Over the past 5 years, the fund has a negative alpha of -3.79. This means that managers in this portfolio find it difficult to pick securities that generate better-than-benchmark returns.
Holdings
Exploring 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 87.89% stock in stocks, with an average market capitalization of $3.39 billion. The fund has the heaviest exposure to the following market sectors:
Finance
Industrial Cyclical
Technology
Turnover is 9%, which means, on average, the fund makes fewer trades than the average comparable fund.
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, VTMSX is a no load fund. It has an expense ratio of 0.09% compared to the category average of 1.08%. So, VTMSX is actually cheaper than its peers from a cost perspective.
Investors should also note that the minimum initial investment for the product is $10,000 and that each subsequent investment needs to be at $1.
Bottom Line
Overall, Vanguard Tax-Managed Small Cap Investor ( VTMSX ) has a high Zacks Mutual Fund rank, and in conjunction with its comparatively strong performance, average downside risk, and lower fees, this fund looks like a good potential choice for investors right now.
This could just be the start of your research on VTMSXin the Mutual Fund Equity Report category. Consider going to www.zacks.com/funds/mutual-funds for additional information about this fund, and all the others that we rank as well 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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