Is Vanguard Explorer Fund Investor (VEXPX) a Strong Mutual Fund Pick Right Now?

If you’ve been stuck searching for Mutual Fund Equity Report funds, consider Vanguard Explorer Fund Investor (VEXPX) as a possibility. VEXPX possesses a Zacks Mutual Fund Rank of 2 (Buy), which is based on various forecasting factors like size, cost, and past performance.

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History of Fund/Manager

Vanguard Group is based in Malvern, PA, and is the manager of VEXPX. Vanguard Explorer Fund Investor debuted in December of 1967. Since then, VEXPX has accumulated assets of about $2.83 billion, according to the most recently available information. The fund’s current manager is a team of investment professionals.

Performance

Obviously, what investors are looking for in these funds is strong performance relative to their peers. VEXPX has a 5-year annualized total return of 8.44% and is in the top 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 5.42%, 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. VEXPX’s standard deviation over the past three years is 25.36% compared to the category average of 21.86%. Looking at the past 5 years, the fund’s standard deviation is 22.89% compared to the category average of 19.47%. This makes the fund more volatile than its peers over the past half-decade.

Risk Factors

With a 5-year beta of 1.13, the fund is likely to be more 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. VEXPX’s 5-year performance has produced a negative alpha of -1.21, which means 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 largely on equities that are traded in the United States.

Right now, 88.3% of this mutual fund’s holdings are stocks, with an average market capitalization of $8.12 billion. The fund has the heaviest exposure to the following market sectors:

  • Technology
  • Industrial Cyclical
  • Health
  • Finance

Turnover is 44%, which means, on average, the fund makes fewer trades than comparable funds.

Expenses

Costs are increasingly important for mutual fund investing, and particularly as competition heats up in this market. And all things being equal, a lower cost product will outperform its otherwise identical counterpart, so taking a closer look at these metrics is key for investors. In terms of fees, VEXPX is a no load fund. It has an expense ratio of 0.45% compared to the category average of 1.20%. So, VEXPX is actually cheaper than its peers from a cost perspective.

While the minimum initial investment for the product is $3,000, investors should also note that each subsequent investment needs to be at least $1.

Bottom Line

Overall, Vanguard Explorer Fund Investor ( VEXPX ) has a high Zacks Mutual Fund rank, and in conjunction with its comparatively strong performance, average downside risk, and lower fees, Vanguard Explorer Fund Investor ( VEXPX ) looks like a good potential choice for investors right now.

Don’t stop here for your research on Mutual Fund Equity Report funds. We also have plenty more on our site in order to help you find the best possible fund for your portfolio. Make sure to check out www.zacks.com/funds/mutual-funds for more information about the world of funds, and feel free to compare VEXPX to its peers as well for additional information. If you want to check out our stock reports as well, make sure to go to Zacks.com to see all of the great tools we have to offer, including our time-tested Zacks Rank.

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