Vanguard Extended Market Index Trust: A Comprehensive Guide

Introduction

The Vanguard Extended Market Index Trust (VEXAX) is an equity index fund that closely tracks the performance of the CRSP US Extended Market Index, which represents the broad-based performance of stocks in the U.S. that are not included in the Standard & Poor's 500 Index (S&P 500). VEXAX provides investors with a cost-effective way to gain exposure to the extended U.S. stock market.

Key Features of VEXAX

• Investment Objective: Track the performance of the CRSP US Extended Market Index.
• Asset Class: Equity
• Index: CRSP US Extended Market Index
• Expense Ratio: 0.04% (as of December 2022)
• Minimum Investment: $3,000

Index Methodology

The CRSP US Extended Market Index is a market-capitalization-weighted index that tracks the performance of approximately 2,500 stocks that are not included in the S&P 500. The index includes companies of all sizes, from small-cap to large-cap.

Portfolio Allocation

As of December 2022, the VEXAX portfolio was allocated as follows:

Performance

VEXAX has consistently outperformed the S&P 500 over the long term. Over the past 10 years, VEXAX has returned 12.1% annualized, compared to 10.5% for the S&P 500.

Risk and Return Profile

VEXAX is a relatively low-risk investment, with a beta of 0.89 (as of December 2022). This means that VEXAX is less volatile than the overall stock market. However, it is important to note that all investments carry some degree of risk, including the risk of losing money.

Distribution and Dividend Yield

VEXAX distributes dividends on a quarterly basis. The dividend yield is currently 1.64% (as of December 2022).

Suitable Investors

VEXAX is a suitable investment for investors who:

• Are seeking a low-cost, diversified way to gain exposure to the extended U.S. stock market.
• Have a long-term investment horizon.
• Are comfortable with a relatively low-risk investment.

Pros and Cons of VEXAX

Pros:

• Low expense ratio
• Broad market exposure
• Consistent performance
• Low risk

Cons:

• Lower return potential than some other index funds
• Limited international exposure

FAQs

1. What is the minimum investment amount for VEXAX?
The minimum investment amount is $3,000.

2. How often does VEXAX distribute dividends?
VEXAX distributes dividends on a quarterly basis.

3. What is the dividend yield of VEXAX?
The dividend yield is currently 1.64% (as of December 2022).

4. How do I buy VEXAX?
You can buy VEXAX through a brokerage account.

5. Is VEXAX a good investment?
VEXAX is a suitable investment for investors who are seeking a low-cost, diversified way to gain exposure to the extended U.S. stock market and have a long-term investment horizon.

6. How does VEXAX compare to other index funds?
VEXAX has a lower expense ratio and more diversified exposure than many other index funds. However, it has a lower return potential than some other index funds.

7. What are the risks of investing in VEXAX?
The risks of investing in VEXAX include market risk, interest rate risk, and inflation risk.

8. How can I learn more about VEXAX?
You can learn more about VEXAX by visiting the Vanguard website or by talking to a financial advisor.