VASVX
Vanguard Selected Value-Inv
Strategic Focus on Mid-Cap Value
The Vanguard Selected Value-Inv fund distinguishes itself with a strategic focus on mid-cap value stocks, primarily targeting medium-sized U.S. companies. This approach aims to capture the growth potential of companies that are often overlooked by larger funds, providing a unique opportunity for investors seeking both capital appreciation and income. Managed by Vanguard, a leader in cost-effective investment solutions, the fund benefits from a disciplined investment process and a commitment to delivering value to its investors. The fund’s emphasis on value investing means it seeks out companies that are undervalued by the market, offering the potential for significant upside as these companies realize their intrinsic value. This strategy is particularly appealing in volatile markets where value stocks may outperform their growth counterparts.
At A Glance
Executive Summary
VASVX offers growth and income by investing in mid-sized U.S. companies, with a focus on value and a competitive expense ratio.
– Strong focus on mid-cap value stocks, offering potential for growth and income. – Managed by Vanguard, known for cost-effective investment solutions. – Competitive expense ratio compared to similar funds.
– Underperformance compared to the S&P 500 benchmark. – Negative risk metrics such as alpha and Sharpe ratio. – High exposure to financial sector, which may increase sector-specific risks.
Navigating Performance Peaks and Valleys
The Vanguard Selected Value-Inv fund has demonstrated varied performance across different time frames. Over the past year, the fund achieved a notable return of 31.34%, showcasing its ability to capitalize on favorable market conditions. However, when compared to its benchmark, the S&P 500 Total Return Index, which posted a 38.80% return, the fund underperformed. This discrepancy highlights the challenges faced by mid-cap value funds in keeping pace with broader market indices dominated by large-cap growth stocks. Despite this, the fund’s five-year annualized return of 12.94% and ten-year return of 9.64% reflect its resilience and potential for long-term growth. The fund’s performance is influenced by its sector allocation and stock selection, which can lead to periods of both outperformance and underperformance relative to its peers and benchmark.
Understanding the Risk Landscape
The risk profile of the Vanguard Selected Value-Inv fund is characterized by several key metrics. With a beta of 0.85, the fund exhibits lower volatility compared to the broader market, suggesting a more conservative risk approach. However, the negative alpha of -7.51% indicates that the fund has not consistently outperformed its benchmark on a risk-adjusted basis. The Sharpe ratio of -0.51 further underscores the challenges in achieving excess returns relative to the risk taken. The fund’s standard deviation of 4.27% reflects moderate volatility, while the Treynor ratio of -8.81 suggests inefficiencies in risk management. Despite these metrics, the fund’s downside risk, measured by a downside risk (UI) of 3.22, indicates a relatively controlled exposure to adverse market movements. Investors should consider these risk factors in the context of their own risk tolerance and investment objectives.
Diverse Holdings and Strategic Allocation
The Vanguard Selected Value-Inv fund’s portfolio is diversified across various sectors, with a significant allocation to financials at 25.15%, followed by industrials at 16.75% and technology at 10.23%. This sector allocation reflects the fund’s strategic focus on industries with strong growth potential and value characteristics. The top holdings include AerCap Holdings NV, Gildan Activewear Inc, and Fidelity National Financial Inc, each contributing to the fund’s overall performance. The fund’s allocation to medium-sized companies, with 49.13% in medium market cap stocks, aligns with its mid-cap value strategy. This focus on medium-sized companies allows the fund to tap into growth opportunities that may not be available in larger-cap stocks. The fund’s cash position of 5.25% provides liquidity and flexibility to capitalize on market opportunities as they arise.
Balancing Growth and Income
The Vanguard Selected Value-Inv fund offers a yield of 1.50%, which, while modest, provides a steady income stream for investors. This yield is competitive within the mid-cap value category, where income generation is often secondary to capital appreciation. The fund’s income strategy is supported by its focus on dividend-paying stocks, particularly within the financial and industrial sectors. For income-focused investors, the fund’s yield may complement other income-generating investments, while growth-focused investors may appreciate the potential for capital gains as undervalued stocks appreciate in value. The fund’s dual objective of growth and income makes it suitable for investors seeking a balanced approach to portfolio construction.
Cost-Effective Investment with Vanguard
The Vanguard Selected Value-Inv fund boasts an expense ratio of 0.43%, which is competitive within the mid-cap value category. This low expense ratio is a hallmark of Vanguard’s commitment to providing cost-effective investment solutions. By minimizing costs, the fund enhances net returns for investors, allowing more of the fund’s performance to translate into investor gains. Compared to similar funds, the Vanguard Selected Value-Inv fund offers a cost advantage, making it an attractive option for cost-conscious investors. The fund’s expense structure aligns with Vanguard’s philosophy of delivering value to investors through low-cost, high-quality investment products.
Standing Out in a Crowded Field
When compared to similar funds, the Vanguard Selected Value-Inv fund offers unique advantages and some limitations. Its focus on mid-cap value stocks sets it apart from peers like the PGIM Jennison MidCap Growth-Z and CIBC Atlas MidCap Equity-Inst, which emphasize growth. The fund’s competitive expense ratio further distinguishes it from higher-cost alternatives. However, its underperformance relative to the S&P 500 and certain peers, such as the Vanguard MidCap Growth IxFd-Inv, highlights the challenges of its value-oriented strategy in a growth-dominated market. Despite these challenges, the fund’s strategic sector allocation and disciplined investment approach provide a compelling case for investors seeking exposure to mid-cap value stocks.
Future Outlook
The Vanguard Selected Value-Inv fund may benefit from a market environment favoring mid-cap value stocks, especially if economic conditions support growth in medium-sized companies. Its focus on financials could be advantageous if interest rates rise, boosting financial sector performance.
Tailored for the Value-Seeking Investor
The Vanguard Selected Value-Inv fund is well-suited for investors with a moderate risk tolerance who are seeking a blend of growth and income. Its focus on mid-cap value stocks appeals to those looking for undervalued opportunities with the potential for capital appreciation. The fund’s strategic sector allocation and disciplined investment process make it an attractive option for long-term investors who are comfortable with periods of underperformance in exchange for potential long-term gains. Ideal investors for this fund include those who prioritize cost-effectiveness and are willing to accept the inherent risks associated with value investing in the mid-cap space.
Current Market Context and Implications
The current market environment presents both challenges and opportunities for the Vanguard Selected Value-Inv fund. With interest rates on the rise, the financial sector, which constitutes a significant portion of the fund’s holdings, may benefit from improved margins and profitability. However, the broader economic landscape, characterized by inflationary pressures and potential economic slowdowns, could impact mid-cap companies differently than their large-cap counterparts. Tax implications for investors may also vary, particularly for those in higher tax brackets, as dividend income and capital gains are realized. The fund’s strategic focus on value stocks may offer a hedge against market volatility, as value stocks often outperform in uncertain economic conditions. Investors should consider these factors when evaluating the fund’s potential performance in the current market context.
Similar Securities
Fidelity Series Intrinsic Opportunity – FDMLX
Fidelity MidCap Value Index Fd – FIMVX
Fidelity Adv Value Strategies-I – FASOX
Vanguard Selected Value-Inv – VASVX
Fidelity Low-Priced Stock-K6 – FLKSX
Fidelity Low-Priced Stock – FLPSX
Fidelity MidCap Value-K6 – FCMVX
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