Vanguard Small Cap Index Fund Institutional Shares: A Comprehensive Guide

The Vanguard Small Cap Index Fund Institutional Shares (VISVX) is a passively managed index fund that tracks the performance of the CRSP US Small Cap Index. The fund invests in small-cap stocks of U.S. companies with market capitalizations between $300 million and $2 billion.

Fund Overview

VISVX was launched in 1992 and has a long-term track record of strong performance. The fund has consistently outperformed its benchmark, the Russell 2000 Index, over various time periods. As of June 30, 2023, VISVX had a net asset value (NAV) of $34.5 billion and an expense ratio of 0.05%.

Investment Strategy

VISVX uses a passive management approach, meaning it tracks a predetermined index rather than making active investment decisions. The fund invests in approximately 600 small-cap stocks, with the top 10 holdings accounting for about 20% of the portfolio. The fund's sector allocation is diversified, with technology, healthcare, and consumer discretionary being the largest sectors represented.

Performance History

VISVX has a strong track record of performance, outperforming its benchmark and peer group over time. Over the past 10 years, the fund has returned an average of 10.5% annually, compared to 9.5% for the Russell 2000 Index and 9.8% for the average small-cap index fund.

Features and Benefits

• Low expense ratio: VISVX has an expense ratio of 0.05%, making it one of the most cost-effective small-cap index funds in the market.
• Broad diversification: The fund invests in a wide range of small-cap stocks, providing investors with diversification and reducing overall risk.
• Long-term track record: VISVX has been in operation for over 30 years, providing investors with a proven track record of performance.

Investor Profile

VISVX is suitable for investors who:

• Seek long-term growth potential: Small-cap stocks have historically outperformed large-cap stocks over the long term.
• Are comfortable with volatility: Small-cap stocks can be more volatile than large-cap stocks.
• Understand the risks: Investing in small-cap stocks carries higher risks than investing in large-cap stocks.

How to Invest

Investors can purchase VISVX shares through a brokerage account. The fund has a minimum investment requirement of $3,000.

Comparison to Other Small Cap Index Funds

VISVX compares favorably to other small-cap index funds in terms of expense ratio, performance, and diversification. Here is a table comparing VISVX to three of its competitors:

Conclusion

The Vanguard Small Cap Index Fund Institutional Shares (VISVX) is a well-diversified, cost-effective index fund that provides investors with access to the potential growth of small-cap stocks. The fund's strong track record and low expense ratio make it an attractive option for long-term investors seeking higher returns.

Appendix

Table 1: Sector Allocation of VISVX

Table 2: Top 10 Holdings of VISVX

Table 3: Performance of VISVX vs. Benchmark

Table 4: Common Mistakes to Avoid When Investing in Small Caps