Is Vanguard Small-Cap Index Investor (NAESX) a Strong Mutual Fund Pick Right Now?

If you’re looking for an Index fund category, then a possible option is Vanguard Small-Cap Index Investor (NAESX). The fund does not have a Zacks Mutual Fund Rank, though we have been able to explore other metrics like performance, volatility, and cost.

NAESX is a part of the Vanguard Group family of funds, a company based out of Malvern, PA. Since Vanguard Small-Cap Index Investor made its debut in March of 1975, NAESX has garnered more than $345.94 million in assets. The fund’s current manager, William Coleman, has been in charge of the fund since April of 2016.

Investors naturally seek funds with strong performance. This fund in particular has delivered a 5-year annualized total return of 10.53%, 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 4.23%, which places it in the middle third during this time-frame.

It is important to note that the product’s returns may not reflect all its expenses. Any fees not reflected would lower the returns. Total returns do not reflect the fund’s [%] sale charge. If sales charges were included, total returns would have been lower.

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. Over the past three years, NAESX’s standard deviation comes in at 20.96%, compared to the category average of 15.99%. Over the past 5 years, the standard deviation of the fund is 22.73% compared to the category average of 17.19%. This makes the fund more volatile than its peers over the past half-decade.

Investors should note that the fund has a 5-year beta of 1.14, so it is likely going to be 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. NAESX’s 5-year performance has produced a negative alpha of -5.63, which means managers in this portfolio find it difficult to pick securities that generate better-than-benchmark returns.

Examining 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 largely on equities that are traded in the United States.

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